0001437749-19-008626.txt : 20190503 0001437749-19-008626.hdr.sgml : 20190503 20190503071048 ACCESSION NUMBER: 0001437749-19-008626 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 42 CONFORMED PERIOD OF REPORT: 20190331 FILED AS OF DATE: 20190503 DATE AS OF CHANGE: 20190503 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTELLIGENT SYSTEMS CORP CENTRAL INDEX KEY: 0000320340 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 581964787 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09330 FILM NUMBER: 19794031 BUSINESS ADDRESS: STREET 1: 4355 SHACKLEFORD RD CITY: NORCROSS STATE: GA ZIP: 30093 BUSINESS PHONE: 4043812900 MAIL ADDRESS: STREET 1: 4355 SHACKLEFORD ROAD CITY: NORCROSS STATE: GA ZIP: 30093 10-Q 1 ins20190331_10q.htm FORM 10-Q ins20190331_10q.htm
 

 



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

 

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2019

 

OR

 

 

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                   to                     

 

Commission file number 1-9330

 

INTELLIGENT  SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)

 

 

Georgia  58-1964787
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

 

                                  

4355 Shackleford Road, Norcross, Georgia 30093
(Address of principal executive offices) (Zip Code)


Registrant’s telephone number, including area code: (770) 381-2900

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

 

Indicated by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer     ☐ Accelerated filer                       ☐
Non-accelerated filer       ☐ Smaller reporting company     ☑
  Emerging growth company     ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use to the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $.01 par value for the Class

INS

NYSE American

 

As of April 30, 2019, 8,850,988 shares of Common Stock of the issuer were outstanding.

 



 

 
 

 

Intelligent Systems Corporation

 

Index

Form 10-Q

 

 

    Page
Part I Financial Information  
     

Item1

Financial Statements

 

 

Consolidated Balance Sheets at March 31, 2019 and December 31, 2018

3
 

Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018

4
 

Consolidated Statements of Comprehensive Income for the three months ended March 31, 2019 and 2018

4
 

Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2019 and 2018

5
 

Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018

6

 

Notes to Consolidated Financial Statements

7

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

11

Item 4

Controls and Procedures

14
     
Part II Other Information  
     
Item 6 Exhibits 15
     
Signatures   15

 

2

 
 

 

Part I     FINANCIAL INFORMATION

 

Item 1. Financial Statements

Intelligent Systems Corporation

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

 

As of

 

March 31,

2019

   

December 31,

2018

 

 

 

(unaudited)

   

(audited)

 
ASSETS                

Current assets:

               

Cash

  $ 22,071     $ 18,919  

Marketable securities

    379       349  

Accounts receivable, net

    3,689       3,731  

Notes and interest receivable, current portion

          581  

Other current assets

    1,092       1,202  

Total current assets

    27,231       24,782  

Investments

    760       760  

Notes and interest receivable, net of current portion

    2,861       1,745  

Property and equipment, at cost less accumulated depreciation

    1,445       1,513  

Other long-term assets

    1,637       504  

Total assets

  $ 33,934     $ 29,304  
                 

LIABILITIES AND STOCKHOLDERS’ EQUITY

               

Current liabilities:

               

Accounts payable

  $ 272     $ 272  

Deferred revenue, current portion

    905       781  

Accrued payroll

    1,285       1,145  

Accrued expenses

    127       71  

Income tax payable

    943       284  

Other current liabilities

    1,582       719  

Total current liabilities

    5,114       3,272  

Noncurrent liabilities:

               

Deferred revenue, net of current portion

    74       111  

Long-term lease obligation

    670        

Total noncurrent liabilities

    744       111  

Intelligent Systems Corporation stockholders’ equity:

               

Common stock, $0.01 par value, 20,000,000 shares authorized, 8,850,988 and 8,817,988 issued and outstanding at March 31, 2019 and December 31, 2018, respectively

    89       88  

Additional paid-in capital

    15,133       15,050  

Accumulated other comprehensive loss

    (93 )     (92 )

Accumulated income

    12,947       10,875  

Total Intelligent Systems Corporation stockholders’ equity

    28,076       25,921  

Total liabilities and stockholders’ equity

  $ 33,934     $ 29,304  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

3

 
 

 

Intelligent Systems Corporation

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except share and per share amounts)

 

    Three Months Ended March 31,  
   

2019

   

2018

 

Revenue

               

Services

  $ 6,166     $ 3,963  

Products

    800       95  

Total net revenue

    6,966       4,058  

Cost of revenue

               

Services

    2,534       1,607  

Products

          136  

Total cost of revenue

    2,534       1,743  

Expenses

               

Marketing

    38       68  

General and administrative

    594       473  

Research and development

    1,195       953  

Income from operations

    2,605       821  

Other income

    126       72  

Income before income taxes

    2,731       893  

Income taxes

    659        

Net income

  $ 2,072     $ 893  

Earnings per share attributable to Intelligent Systems Corporation:

               

Basic

  $ 0.23     $ 0.10  

Diluted

  $ 0.23     $ 0.10  

Basic weighted average common shares outstanding

    8,841,321       8,777,988  

Diluted weighted average common shares outstanding

    8,990,438       8,912,130  

 

 

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)

 

    Three Months Ended March 31,  
   

2019

   

2018

 

Net income

  $ 2,072     $ 893  

Other comprehensive income (loss):

               

Foreign currency translation adjustments

    (1 )     1  

Unrealized loss on available-for-sale marketable securities

          (17 )

Total comprehensive income

  $ 2,071     $ 877  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

4

 
 

 

Intelligent Systems Corporation

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

 

   

Common Stock

   

Additional Paid-In

Capital

   

Accumulated Other

Comprehensive Loss

   

Accumulated

Earnings

   

Stockholders’ Equity

 
   

Shares

   

Shares

                                 

Balance at December 31, 2017

    8,777,988     $ 88     $ 14,877     $ (143 )   $ 4,631     $ 19,453  

Stock options exercised

    --       --                                  

Net income

                                    893       893  

Stock compensation expense

                    13                       13  

Foreign currency translation adjustment

                            1               1  

Unrealized gain on marketable securities

                            (17 )             (17 )

Balance at March 31, 2018

    8,777,988     $ 88     $ 14,890       (159 )   $ 5,524     $ 20,343  
                                                 

Balance at December 31, 2018

    8,817,988     $ 88     $ 15,050     $ (92 )   $ 10,875     $ 25,921  

Stock options exercised

    33,000       1       58                       59  

Net income

                            --       2,072       2,072  

Stock compensation expense

                    25                       25  

Foreign currency translation adjustment

                            (1 )             (1 )

Balance at March 31, 2019

    8,850,988     $ 89     $ 15,133     $ (93 )   $ 12,947     $ 28,076  

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

5

 
 

 

Intelligent Systems Corporation

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

    Three Months Ended March 31,  

CASH PROVIDED BY (USED FOR):

 

2019

   

2018

 
                 

OPERATING ACTIVITIES:

               

Net income

  $ 2,072     $ 893  
Adjustments to reconcile net income from continuing operations to net cash used for operating activities:                

Depreciation and amortization

    180       131  

Stock-based compensation expense

    25       13  

Non-cash investment expense

    --       5  

Non-cash interest income

    (30 )     (21 )

Equity in loss of affiliate company

    --       19  

Changes in operating assets and liabilities:

               

Accounts receivable

    42       (1,716 )

Other current assets

    110       (2,657 )

Other long-term assets

    (37 )     (34 )

Accounts payable

    --       (192 )

Accrued payroll

    140       334  

Deferred revenue, current portion

    124       (5 )

Accrued expenses

    56       7  

Other current liabilities

    1,061       (7 )

Deferred revenue, net of current portion

    (37 )     43  

Net cash used for operating activities

    3,706       (3,187 )
                 

INVESTING ACTIVITIES:

               

Purchases of property and equipment

    (112 )     (170 )

Advances of notes receivable

    (500 )     (485 )

Net cash used for investing activities

    (612 )     (655 )
                 

FINANCING ACTIVITIES:

               
                 

Sale of capital stock pursuant to exercise of option

    59       --  

Net cash provided by financing activities

    59       --  
                 

Effects of exchange rate changes on cash

    (1 )     1  

Net increase (decrease) in cash

    3,152       (3,841 )

Cash at beginning of period

    18,919       14,024  

Cash at end of period

  $ 22,071     $ 10,183  

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

6

 

 

Intelligent Systems Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

 
 

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

Throughout this report, the terms “we”, “us”, “ours”, “ISC” and “company” refer to Intelligent Systems Corporation, including its wholly-owned and majority-owned subsidiaries. The unaudited Consolidated Financial Statements presented in this Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States applicable to interim financial statements. Accordingly, they do not include all of the information and notes required for complete financial statements. In the opinion of ISC management, these Consolidated Financial Statements contain all adjustments (which comprise only normal and recurring accruals) necessary to present fairly the financial position and results of operations as of and for the three month periods ended March 31, 2019 and 2018. The interim results for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the full year. These statements should be read in conjunction with our Consolidated Financial Statements and notes thereto for the fiscal year ended December 31, 2018, as filed in our Annual Report on Form 10-K.

 

There have been no material changes in the Company’s significant accounting policies, other than the adoption of accounting standards update (“ASU”) 2016-02, Leases (Topic 842) related to the accounting for leases, in the first quarter of 2019 as described below, as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.


Accounting Pronouncements Adopted

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under prior accounting guidance. ASU 2016-02 requires that a lessee should recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term on the balance sheet. We adopted ASU 2016-02 in the first quarter of 2019 utilizing the modified retrospective transition method at the beginning of the first quarter of 2019. We have elected the package of practical expedients, which allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date, (3) initial direct costs for any existing leases as of the adoption date and (4) the application of hindsight when determining lease term and assessing impairment of right-of-use assets. The adoption of the new standard on January 1, 2019, resulting in a lease obligation and related right-of-use asset of approximately $1,258,000. The impact on the statement of operations was not material.

 

We have considered all other recently issued accounting pronouncements and do not believe the adoption of such pronouncements will have a material impact on our Consolidated Financial Statements.

 

 
 

2.

REVENUE

 

Disaggregation of Revenue

 

In the following table, revenue is disaggregated by type of revenue for the three months ended March 31, 2019 and 2018:

 

Three months ended March 31, (in thousands)

 

2019

   

2018

 

License

  $ 800     $ 95  

Professional services

    3,964       2,109  

Processing and maintenance

    1,811       1,624  

Third party

    391       230  

Total

  $ 6,966     $ 4,058  

 

7

 

 

Foreign revenues are based on the location of the customer. Revenues from customers by geographic areas for the three months ended March 31, 2019 and 2018 are as follows:

 

Three months ended March 31, (in thousands)

 

2019

   

2018

 

European Union

  $ 1,219     $ 836  

United States

    5,747       3,222  

Total

  $ 6,966     $ 4,058  

 

Concentration of Revenue

 

The following table indicates the percentage of consolidated revenue represented by each customer that represented more than 10 percent of consolidated revenue in the three month periods ended March 31, 2019 and 2018. Most of our customers have multi-year contracts with recurring revenue as well as professional services fees that vary by period depending on their business needs.

 

    Three Months Ended March 31,  
   

2019

   

2018

 

Customer A

    47.8 %     27.3 %

Customer B

    17.1 %     20.3 %

Customer C

    2.7 %     11.1 %

 

 
 

3.

Notes Receivable

 

In the quarter ended September 30, 2017, we entered into a Loan Agreement with a privately-held identity and professional services company with ties to the FinTech industry. We committed to lend up to $1,500,000 all of which has been advanced as of March 31, 2019. The loan bears interest at the rate of 6.0 percent annually with the maturity date for each Promissory Note on the fourth anniversary of funding of such Promissory Note, extendable by one additional year at the borrower’s election. We are entitled to purchase, at a nominal price, certain Warrant Units in conjunction with each advance. Upon exercising the Warrant Units, we are entitled to receive up to fourteen percent ownership of Common A Units in the company.

 

During 2018, we advanced $550,000 on three separate simple Promissory Note(s) and in 2019 we advanced an additional $500,000 to the aforementioned identity and professional services company. The Notes bear interest at the rate of 6.0 percent annually with an original maturity date six months from the date of funding the Notes. In March 2019, the parties agreed to extend the maturity date of these Promissory Notes to December 31, 2020.

 

In the quarter ended March 31, 2018, we entered into a Convertible Loan Agreement with a private limited India based company in the FinTech industry. We committed to lend up to $435,000 with an initial advance of $235,000. The loan bears interest at the rate of 5.0 percent annually with the maturity date on the third anniversary of funding of such Promissory Note. We are entitled to convert the principal on the initial Note for up to ten percent ownership of shares of the company.

 

 
 

4.

Stock-based Compensation

 

At March 31, 2019, we have three stock-based compensation plans in effect. We record compensation cost related to unvested stock awards by recognizing the unamortized grant date fair value on a straight line basis over the vesting periods of each award. We have estimated forfeiture rates based on our historical experience. Stock option compensation expense for the three month periods ended March 31, 2019 and 2018 has been recognized as a component of general and administrative expenses in the accompanying Consolidated Financial Statements. We recorded $25,000 and $13,000 of stock-based compensation expense during the quarters ended March 31, 2019 and 2018, respectively.

 

8

 

 

As of March 31, 2019, there is $401,000 of unrecognized compensation cost related to stock options. We granted 30,000 options during the three months ended March 31, 2019. The following table summarizes options as of March 31, 2019:

 

   

 

 

# of Shares

   

 

Wgt Avg

Exercise

Price

   

Wgt Avg

Remaining

Contractual

Life in Years

   

 

Aggregate

Intrinsic

Value

 

Outstanding at March 31, 2019

    194,500     $ 5.07       4.9     $ 5,226,180  

Vested and exercisable at March 31, 2019

    146,000     $ 1.83       3.4     $ 4,395,480  

 

The estimated fair value of options granted is calculated using the Black-Scholes option pricing model with assumptions as previously disclosed in our 2018 Form 10-K.

 

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the company’s closing stock price on the last trading day of the first quarter of 2019 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on March 31, 2019. The amount of aggregate intrinsic value will change based on the market value of the company’s stock.

 

 
 

5.

Fair Value of Financial Instruments

 

The carrying value of cash, marketable securities, accounts receivable, accounts payable and certain other financial instruments (such as accrued expenses, and other current liabilities) included in the accompanying consolidated balance sheets approximates their fair value principally due to the short-term maturity of these instruments.

 

Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash, marketable securities and trade accounts. Our available cash is held in accounts managed by third-party financial institutions. Cash may exceed the Federal Deposit Insurance Corporation, or FDIC, insurance limits. While we monitor cash balances on a regular basis and adjust the balances as appropriate, these balances could be impacted if the underlying financial institutions fail. To date, we have experienced no loss or lack of access to our cash; however, we can provide no assurances that access to our cash will not be impacted by adverse conditions in the financial markets.

 

 
 

6.

Fair Value Measurements

 

In determining fair value, the company uses quoted market prices in active markets. GAAP establishes a fair value measurement framework, provides a single definition of fair value, and requires expanded disclosure summarizing fair value measurements. GAAP emphasizes that fair value is a market-based measurement, not an entity specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing an asset or liability.

 

GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable input be used when available. Observable inputs are based on data obtained from sources independent of the company that market participants would use in pricing the asset or liability. Unobservable inputs are inputs that reflect the company’s assumptions about the estimates market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

 

The hierarchy is measured in three levels based on the reliability of inputs:

 

 

Level 1

Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments.

 

 

Level 2

Valuations based on quoted prices in less active, dealer or broker markets. Fair values are primarily obtained from third party pricing services for identical or comparable assets or liabilities.

 

9

 

 

 

Level 3

Valuations derived from other valuation methodologies, including pricing models, discounted cash flow models and similar techniques, and not based on market, exchange, dealer, or broker-traded transactions. Level 3 valuations incorporate certain assumptions and projections that are not observable in the market and significant professional judgment is needed in determining the fair value assigned to such assets or liabilities.

 

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

 

Our available-for-sale investments are classified within Level 1 of the valuation hierarchy.

 

The fair value of equity method and cost method investments has not been determined as it was impracticable to do so due to the fact that the investee companies are relatively small, early stage private companies for which there is no comparable valuation data available without unreasonable time and expense.

 

 
 

7.

Commitments and Contingencies

 

Leases

 

We have noncancellable operating leases for offices and data centers expiring at various dates through June 2022. These operating leases are included in "Other long-term assets" on the Company's March 31, 2019 Consolidated Balance Sheet and represent the Company’s right to use the underlying asset for the lease term. The Company’s obligation to make lease payments are included in "other current liabilities" and "Long-term lease obligation" on the Company's March 31, 2019 Consolidated Balance Sheet. Based on the present value of the lease payments for the remaining lease term of the Company's existing leases, the Company recognized right-of-use assets and lease liabilities for operating leases of approximately $1,258,000 on January 1, 2019. Operating lease right-of-use assets and liabilities commencing after January 1, 2019 are recognized at commencement date based on the present value of lease payments over the lease term. As of March 31, 2019, total right-of-use assets and operating lease liabilities were approximately $1,131,000. Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments. The weighted average discount rate used to determine our lease liabilities was 5.5% as of March 31, 2019. The weight average remaining lease term as of March 31, 2019 was 2 years.

 

Legal Matters

 

There are no pending or threatened legal proceedings. However, in the ordinary course of business, from time to time we may be involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. We accrue for unpaid legal fees for services performed to date.

 

 
 

8.

Income Taxes

 

We recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are recognized, net of a valuation allowance, for the estimated future tax effects of deductible temporary differences and tax credit carry-forwards. A valuation allowance against deferred tax assets is recorded when, and if, based upon available evidence, it is more likely than not that some or all deferred tax assets will not be realized.

 

There were no unrecognized tax benefits at March 31, 2019 and December 31, 2018. Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. There were no accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the periods presented. We have determined we have no uncertain tax positions.

 

We file a consolidated U.S. federal income tax return for all subsidiaries in which our ownership equals or exceeds 80%, as well as individual subsidiary returns in various states and foreign jurisdictions. With few exceptions we are no longer subject to U.S. federal, state and local or foreign income tax examinations by taxing authorities for years before 2013.

 

10

 
 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

In addition to historical information, this Form 10-Q may contain forward-looking statements relating to ISC. All statements, trend analyses and other information relative to markets for our products and trends in revenue, gross margins and anticipated expense levels, as well as other statements including words such as “anticipate”, “believe”, “plan”, “estimate”, “expect”, and “intend”, and other similar expressions, constitute forward-looking statements. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties including those factors described below under “Factors That May Affect Future Operations”, and that actual results may differ materially from those contemplated by such forward-looking statements. ISC undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results.

 

For purposes of this discussion and analysis, we are assuming and relying upon the reader’s familiarity with the information contained in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, in the Form 10- K for the year ended December 31, 2018 as filed with the Securities and Exchange Commission.

 

Overview

 

Our consolidated operations consist of our CoreCard Software subsidiary and its affiliate companies in Romania and India, as well as the corporate office which provides significant administrative, human resources and executive management support to CoreCard.

 

We provide technology solutions and processing services to the financial services market, commonly referred to as the FinTech industry. We derive our product revenue from licensing our comprehensive suite of financial transaction management software to accounts receivable businesses, financial institutions, retailers and processors to manage their credit and debit cards, prepaid cards, private label cards, fleet cards, loyalty programs, and accounts receivable and loan transactions. Our service revenue consists of fees for software maintenance and support for licensed software products, fees for processing services that we provide to companies that outsource their financial transaction processing functions to us, and professional services primarily for software customizations provided to both license and processing customers.

 

Our results vary in part depending on the size and number of software licenses recognized as well as the value and number of professional services contracts recognized in a particular period. As we continue to grow our Processing Services business, we continue to gain economies of scale on the investment we have made in the infrastructure, resources, processes and software features developed over the past number of years to support this growing side of our business. We are adding new processing customers at a faster pace than we are adding new license customers, resulting in steady growth in the processing revenue stream. However, we are also experiencing growth in our license revenue and associated professional services due to the addition of a large new customer in 2018. In total, this customer represented 48% of our consolidated revenues in the first quarter of 2019. We expect future professional services, maintenance, and license revenue from this customer in 2019 and future years; however, the amount and timing will be dependent on various factors not in our control such as the number of accounts on file and the level of customization needed by the customer. The infrastructure of our multi customer environment is scalable for the future. A significant portion of our expense is related to personnel, including approximately 400 employees located in India and Romania. Our ability to hire and train employees on our processes and software impacts our ability to onboard new customers and deliver professional services for software customizations. In addition, we have certain corporate office expenses associated with being a public company that impact our operating results.

 

Our revenue fluctuates from period to period and our results are not necessarily indicative of the results to be expected in future periods. It is difficult to predict the level of consolidated revenue on a quarterly or annual basis for a number of reasons, including the following:

 

 

Software license revenue in a given period may consist of a relatively small number of contracts and contract values can vary considerably depending on the software product and scope of the license sold. Consequently, even minor delays in delivery under a software contract (which may be out of our control) could have a significant and unpredictable impact on the consolidated revenue that we recognize in a given quarterly or annual period.

 

Customers may decide to postpone or cancel a planned implementation of our software for any number of reasons, which may be unrelated to our software or contract performance, but which may affect the amount, timing and characterization of our deferred and/or recognized revenue.

 

11

 

 

 

Customers typically require our professional services to modify or enhance their CoreCard software implementation based on their specific business strategy and operational requirements, which vary from customer to customer and period to period.

 

The timing of new processing customer implementations is often dependent on third party approvals or processes which are typically not under our direct control.

 

We continue to maintain a strong cash position. We intend to use cash balances to support the domestic and international operations associated with our CoreCard business and to expand our operations in the FinTech industry through financing the growth of CoreCard and, if appropriate opportunities become available, through acquisitions of businesses in this industry. In November 2018, our Board of Directors authorized a share repurchase program of $5 million. We did not make any share repurchases in 2018 or 2019.

 

Results of Operations

 

The following discussion should be read in conjunction with the Consolidated Financial Statements and the notes to Consolidated Financial Statements presented in this quarterly report.

 

Revenue – Total revenue in the three month period ended March 31, 2019 was $6,966,000 which represents a 72 percent increase over the first quarter of 2018.

 

 

Revenue from services was $6,166,000 in the first quarter of 2019 compared to $3,963,000 in the first quarter of 2018. Revenue from transaction processing services, software maintenance and support services, and professional services were greater in the first quarter of 2019 as compared to the first quarter of 2018 due to an increase in the number of customers and accounts on file, an increase in the number and value of professional services contracts completed during the first quarter of 2019. We expect that processing services will continue to grow as our customer base increases; however, the time required to implement new customer programs could be delayed due to third party integration and approval processes. It is not possible to predict with any accuracy the number and value of professional services contracts that our customers will require in a given period. Customers typically request our professional services to modify or enhance their CoreCard® software implementation based on their specific business strategy and operational requirements, which vary from customer to customer and period to period.

 

 

Revenue from products, which is primarily software license fees, was $800,000 in the three month period ended March 31, 2019, compared to $95,000 in the three month period ended March 31, 2018. The increase is primarily due to the new license customer, as discussed above.

 

Cost of Revenue – Total cost of revenue was 36 percent and 43 percent of total revenue in the three month period ended March 31, 2019 and 2018, respectively. The decrease in cost of revenue as a percentage of revenue is primarily driven by increased product sales with low associated costs. Cost of revenue includes costs to provide annual maintenance and support services to our installed base of licensed customers, costs to provide professional services, and costs to provide our financial transaction processing services. The cost and gross margins on such revenues can vary considerably from period to period depending on the customer mix, customer requirements and project complexity as well as the mix of our U.S. and offshore employees working on the various aspects of services provided. In addition, we continue to devote the resources necessary to support our growing processing business, including direct costs for regulatory compliance, infrastructure, network certifications, and customer support. However, we are continuing to experience economies of scale in our processing environment and did experience a decrease year over year for our cost of financial transaction processing services as a percentage of transaction processing services revenue. This may be subject to change in the future if new regulations or processing standards are implemented causing us to incur additional costs to comply.

 

Operating Expenses – In the three month period ended March 31, 2019, total operating expenses from consolidated operations were greater than in the corresponding period in 2018 primarily as the result of increased research and development expenses. Research and development expenses were 26 percent higher in 2019 as compared to 2018, mainly due to payroll and related expense for additional offshore technical personnel and a recognition based bonus accrual. General and administrative expenses were higher in 2019 than in 2018, due to higher personnel-related expense at the corporate offices in 2019. Marketing expenses decreased 45 percent year over year as we continued to place less focus on marketing initiatives for CoreCard in 2019. Our client base continues to increase with minimal marketing efforts as we continue to have prospects contact us via online searches; however, we will continue to re-evaluate our marketing expenditures as needed to competitively position the Processing Services business.

 

12

 

 

Other Income (Loss) – In the quarter ended March 31, 2019, we recorded $126,000 in other income compared to $72,000 for the quarter ended March 31, 2018, comprised primarily of interest income earned on our cash balances and interest income on our Notes Receivable as described in more detail in Note 3. The increase is primarily due to higher cash and notes receivable balances.

 

Income Taxes – Our effective tax rate for the quarter ended March 31, 2019, was approximately 24% compared to an effective tax rate of zero for the quarter ended March 31, 2018. The higher effective tax rate is due to the utilization of net operating loss carryforwards in 2018.

 

Liquidity and Capital Resources

 

Our cash balance at March 31, 2019 was $22,071,000 compared to $18,919,000 at December 31, 2018. During the quarter ended March 31, 2019, cash provided by operations was $3,706,000 compared to cash used in operations of $3,187,000 for the quarter ended March 31, 2018. The increase is primarily due to the 2018 prepayment of approximately $2,580,000 for processing equipment, software and related licenses that did not recur in 2019, higher net income and an increase in working capital, primarily income taxes payable. In addition, we advanced $500,000 on a Promissory Note which is described in more detail in Note 3 to the Consolidated Financial Statements.

 

We used $112,000 cash to acquire computer equipment primarily for the technical resources added in our India office and to upgrade our existing processing environment in the U.S.

 

We expect to have sufficient liquidity from cash on hand as well as projected customer payments to support our operations and capital equipment purchases in the foreseeable future. Currently, we expect to use cash in excess of what is required for our current operations for opportunities we believe will expand our CoreCard and FinTech business, although there can be no assurance that appropriate opportunities will arise.

 

Off-Balance Sheet Arrangements

 

We do not currently have any off-balance sheet arrangements that are reasonably likely to have a current or future material effect on our financial condition, liquidity or results of operations.

 

Critical Accounting Policies and Estimates

 

The discussion and analysis of our financial condition and results of operations is based upon our Consolidated Financial Statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses. We consider certain accounting policies related to revenue recognition and valuation of investments to be critical policies due to the estimation processes involved in each. Management discusses its estimates and judgments with the Audit Committee of the Board of Directors. For a detailed description on the application of these and other accounting policies, see Note 1 to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. Reference is also made to the discussion of the application of these critical accounting policies and estimates contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for 2018. During the three month period ended March 31, 2019, there were no significant or material changes in the application of critical accounting policies, other than the adoption of ASU 2016-02, Leases (Topic 842) as described further in Note 1 and 7 to the Consolidated Financial Statements, that would require an update to the information provided in the Form 10-K for 2018.

 

Factors That May Affect Future Operations

 

Future operations are subject to risks and uncertainties that may negatively impact our future results of operations or projected cash requirements. It is difficult to predict future quarterly and annual results with certainty.

 

Among the numerous factors that may affect our consolidated results of operations or financial condition are the following:

 

 

Weakness or instability in the global financial markets could have a negative impact due to potential customers (most of whom perform some type of financial services) delaying decisions to purchase software or initiate processing services.

 

Increased federal and state regulations and reluctance by financial institutions to act as sponsor banks for prospective customers could result in losses and additional cash requirements.

 

13

 

 

 

In 2018, we added a large new license customer that represented approximately 48% of our consolidated revenues for the three months ended March 31, 2019. Failure to meet our responsibilities under the related contract could result in breach of contract and loss of the customer and related future revenues.

 

Delays in software development projects could cause our customers to postpone implementations or delay payments, which would increase our costs and reduce our revenue and cash.

 

We could fail to deliver software products which meet the business and technology requirements of our target markets within a reasonable time frame and at a price point that supports a profitable, sustainable business model.

 

Our processing business is impacted, directly or indirectly, by more regulations than our licensed software business. If we fail to provide services that comply with (or allow our customers to comply with) applicable regulations or processing standards, we could be subject to financial or other penalties that could negatively impact our business.

 

Software errors or poor quality control may delay product releases, increase our costs, result in non-acceptance of our software by customers or delay revenue recognition.

 

We could fail to expand our base of customers as quickly as anticipated, resulting in lower revenue and profits and increased cash needs.

 

We could fail to retain key software developers and managers who have accumulated years of know-how in our target markets and company products, or fail to attract and train a sufficient number of new software developers and testers to support our product development plans and customer requirements at projected cost levels.

 

Increasing and changing government regulations in the United States and foreign countries related to such issues as data privacy, financial and credit transactions could require changes to our products and services which could increase our costs and could affect our existing customer relationships or prevent us from getting new customers.

 

Delays in anticipated customer payments for any reason would increase our cash requirements and could adversely impact our profits.

 

Competitive pressures (including pricing, changes in customer requirements and preferences, and competitor product offerings) may cause prospective customers to choose an alternative product solution, resulting in lower revenue and profits (or losses).

 

Our future capital needs are uncertain and depend on a number of factors; additional capital may not be available on acceptable terms, if at all.

 

Other general economic and political conditions could cause customers to delay or cancel purchases.

 

Item 4. Controls and Procedures

 

As of the end of the period covered by this report, the company carried out an evaluation, under the supervision and with the participation of the company’s management, including the company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the company’s disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the company’s disclosure controls and procedures are effective. There were no significant changes in the company’s internal control over financial reporting or in other factors identified in connection with this evaluation that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting.

 

14

 

 

.Part II. OTHER INFORMATION

 

Item 6. Exhibits

 

The following exhibits are filed or furnished with this report:

    3.1 Amended and Restated Articles of Incorporation of the Registrant dated May 4, 2011 (Incorporated by reference to Exhibit 3.(1) to the Registrant’s Form 10-Q for the period ended March 31, 2011)
    3.2 Bylaws of the Registrant dated December 7, 2007.
 

31.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

  31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
  32.1 Certification of Chief Executive Officer and Chief Financial Officer furnished as required by Section 906 of the Sarbanes-Oxley Act of 2002.

 

  101.INS**  XBRL Instance
  101.SCH** XBRL Taxonomy Extension Schema
  101.CAL** XBRL Taxonomy Extension Calculation
  101.DEF** XBRL Taxonomy Extension Definitions
  101.LAB** XBRL Taxonomy Extension Labels
  101.PRE** XBRL Taxonomy Extension Presentation

 

** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

 

INTELLIGENT SYSTEMS CORPORATION 

 

  Registrant  

 

 

 

 

Date: May 3, 2019

By:

/s/  J. Leland Strange

 

 

 

J. Leland Strange 

 

 

 

Chief Executive Officer, President

 

       
       
Date: May 3, 2019 By: /s/  Matthew A. White   
    Matthew A. White  
    Chief Financial Officer  

 

15

 

 

EXHIBIT INDEX

 

Exhibit

No.

 

 

 Descriptions

3.1

 

Amended and Restated Articles of Incorporation of the Registrant dated May 4, 2011 (Incorporated by reference to Exhibit 3.(1) to the Registrant’s Form 10-Q for the period ended March 31, 2011.)

     

3.2

 

Bylaws of the Registrant dated December 7, 2007

     

31.1

 

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

     

31.2

 

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

     

32.1

 

Certification of Chief Executive Officer and Chief Financial Officer furnished as required by Section 906 of the Sarbanes-Oxley Act of 2002.

     

101.INS**

 

XBRL Instance

     

101.SCH**

 

XBRL Taxonomy Extension Schema

     

101.CAL**

 

XBRL Taxonomy Extension Calculations

     

101.DEF**

 

XBRL Taxonomy Extension Definitions

     

101.LAB**

 

XBRL Taxonomy Extension Labels

     

101.PRE**

 

XBRL Taxonomy Extension Presentation

 

 

** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

16

EX-3.2 2 ex_142527.htm EXHIBIT 3.2 ex_142527.htm

Exhibit 3.2

 

 

 

 

 

 

 

 

 

AMENDED AND RESTATED BYLAWS

 

OF

 

INTELLIGENT SYSTEMS CORPORATION

 

As of December 7, 2007

 

(Amended to allow issuance of uncertificated shares)

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

Page

 

ARTICLE ONE Office

1

1.1

Registered Office and Agent

1

1.2

Principal Office

1

1.3

Other Offices

1

     

ARTICLE TWO Shareholders' Meetings

1

2.1

Place of Meetings

1

2.2

Annual Meetings

1

2.3

Special Meetings

2

2.4

Notice of Meetings

2

2.5

Waiver of Notice

2

2.6

Voting Group; Quorum; Vote Required to Act

2

2.7

Voting of Shares

3

2.8

Proxies

3

2.9

Presiding Officer

3

2.10

Adjournments

4

2.11

Conduct of the Meeting

4

2.12

Action of Shareholders Without a Meeting

4

2.13

Matters Considered at Annual Meetings

4

     

ARTICLE THREE Board of Directors

5

3.1

General Powers

5

3.2

Number, Election and Term of Office

5

3.3

Removal of Directors

5

3.4

Vacancies

5

3.5

Compensation

6

3.6

Committees of the Board of Directors

6

3.7

Qualification of Directors

6

3.8

Certain Nomination Requirements

6

     

ARTICLE FOUR Meetings of the Board of Directors

7

4.1

Regular Meetings

7

4.2

Special Meetings

7

4.3

Place of Meetings

7

4.4

Notice of Meetings

7

4.5

Quorum

7

4.6

Vote Required for Action

7

4.7

Participation by Conference Telephone

8

4.8

Action by Directors Without a Meeting

8

4.9

Adjournments

8

4.10

Waiver of Notice

8

     

ARTICLE FIVE Officers

8

5.1

Offices

8

 

 

 

 

5.2

Term

9

5.3

Compensation

9

5.4

Removal

9

5.5

Chairman of the Board

9

5.6

Chief Executive Officer

9

5.7

President

9

5.8

Vice Presidents

10

5.9

Secretary

10

5.10

Treasurer

10

     

ARTICLE SIX Distributions and Dividends

10

     

ARTICLE SEVEN Shares

11

7.1

Shares

11

7.2

Rights of Corporation with Respect to Registered

 
 

Owners

11

7.3

Transfers of Shares

11

7.4

Duty of Corporation to Register Transfer

11

7.5

Lost, Stolen, or Destroyed Certificates

12

7.6

Fixing of Record Date

12

7.7

Record Date if None Fixed

12

     

ARTICLE EIGHT Indemnification

12

8.1

Indemnification of Directors

12

8.2

Indemnification of Others

13

8.3

Other Organizations

13

8.4

Advances

13

8.5

Non-Exclusivity

14

8.6

Insurance

14

8.7

Notice

14

8.8

Security

14

8.9

Amendment

14

8.10

Agreements

15

8.11

Continuing Benefits

15

8.12

Successors

15

8.13

Severability

15

8.14

Additional Indemnification

15

     

ARTICLE NINE Miscellaneous

15

9.1

Inspection of Books and Records

15

9.2

Fiscal Year

16

9.3

Corporate Seal

16

9.4

Annual Statements

16

9.5

Notice

16

     

ARTICLE TEN Amendments

17

 

 

 

 

AMENDED AND RESTATED BYLAWS

OF

INTELLIGENT SYSTEMS CORPORATION

 

As of December 7, 2007

(Amended to allow issuance of uncertificated shares)

 

References in these Amended and Restated Bylaws (the "Bylaws") to "Articles of Incorporation" are to the Articles of Incorporation of Intelligent Systems Corporation, a Georgia corporation (the "Corporation"), as amended and restated from time to time.

 

All of these Bylaws are subject to contrary provisions, if any, of the Articles of Incorporation (including provisions designating the preferences, limitations, and relative rights of any class or series of shares), the Georgia Business Corporation Code (the "Code"), and other applicable law, as in effect on and after the effective date of these Bylaws. References in these Bylaws to "Sections" shall refer to sections of the Bylaws, unless otherwise indicated.

 

 

ARTICLE ONE

Office

 

1.1 Registered Office and Agent. The Corporation shall maintain a registered office and shall have a registered agent whose business office is the same as the registered office.

 

1.2 Principal Office. The principal office of the Corporation shall be at the place designated in the Corporation's annual registration with the Georgia Secretary of State.

 

1.3 Other Offices. In addition to its registered office and principal office, the Corporation may have offices at other locations either in or outside the State of Georgia.

 

 

ARTICLE TWO

Shareholders' Meetings

 

2.1 Place of Meetings. Meetings of the Corporation's shareholders may be held at any location inside or outside the State of Georgia designated by the Board of Directors or any other person or persons who properly call the meeting, or if the Board of Directors or such other person or persons do not specify a location, at the Corporation's principal office.

 

2.2 Annual Meetings. The Corporation shall hold an annual meeting of shareholders, at a time determined by the Board of Directors, to elect directors and to transact any business that properly may come before the meeting. The annual meeting may be combined with any other meeting of shareholders, whether annual or special.

 

1

 

 

2.3 Special Meetings. Special meetings of the shareholders of one or more classes of the series of the Corporation's shares may be called at any time by the Board of Directors, the Chairman of the Board, the President, or the Chief Executive Officer, and shall be called by the Corporation upon the written request (in compliance with applicable requirements of the Code) of the holders of shares representing fifty percent (50%) or more of the votes entitled to be cast on each issue proposed to be considered at the special meeting. The business that may be transacted at any special meeting of the shareholders shall be limited to that proposed in the notice of the special meeting given in accordance with Section 2.4 (including related or incidental matters that may be necessary or appropriate to effectuate the proposed business). Special meetings of shareholders that are called by the shareholders in accordance with the above requirements will be held at least fifty (50) days after receipt by the Corporation's Secretary of the notice meeting such requirements.

 

2.4 Notice of Meetings. In accordance with Section 9.5 and subject to waiver by a shareholder pursuant to Section 2.5, the Corporation shall give written notice of the date, time, and place of each annual and special shareholders' meeting no fewer than 10 days nor more than 60 days before the meeting date to each shareholder of record entitled to vote at the meeting. The notice of an annual meeting need not state the purpose of the meeting unless these Bylaws require otherwise. The notice of a special meeting shall state the purpose for which the meeting is called. If an annual or special shareholders' meeting is adjourned to a different date, time, or location, the Corporation shall give shareholders notice of the new date, time, or location of the adjourned meeting, unless a quorum of shareholders was present at the meeting and information regarding the adjournment was announced before the meeting was adjourned; provided, however, that if a new record date is or must be fixed in accordance with Section 7.6, the Corporation must give notice of the adjourned meeting to all shareholders of record as of the new record date who are entitled to vote at the adjourned meeting.

 

2.5 Waiver of Notice. A shareholder may waive any notice required by the Code, the Articles of Incorporation, or these Bylaws, before or after the date and time of the matter to which the notice relates, by delivering to the Corporation a written waiver of notice signed by the shareholder entitled to the notice. In addition, a shareholder's attendance at a meeting shall be (a) a waiver of objection to lack of notice or defective notice of the meeting unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting, and (b) a waiver of objection to consideration of a particular matter at the meeting that is not within the purpose stated in the meeting notice, unless the shareholder objects to considering the matter when it is presented. Except as otherwise required by the Code, neither the purpose of nor the business transacted at the meeting need be specified in any waiver.

 

2.6 Voting Group: Quorum: Vote Required to Act. (a) Unless otherwise required by the Code or the Articles of Incorporation, all classes or series of the Corporation's shares entitled to vote generally on a matter shall for that purpose be considered a single voting group (a "Voting Group"). If either the Articles of Incorporation or the Code requires separate voting by two or more Voting Groups on a matter, action on that matter is taken only when voted upon by each such Voting Group separately. At all meetings of shareholders, any Voting Group entitled to vote on a matter may take action on the matter only if a quorum of that Voting Group exists at the meeting, and if a quorum exists, the Voting Group may take action on the matter notwithstanding the absence of a quorum of any other Voting Group that may be entitled to vote separately on the matter. Unless the Articles of Incorporation, these Bylaws, or the Code provides otherwise, the presence (in person or by proxy) of shares representing a majority of votes entitled to be cast on a matter by a Voting Group shall constitute a quorum of that Voting Group with regard to that matter. Once a share is present at any meeting other than solely to object to holding the meeting or transacting business at the meeting, the share shall be deemed present for quorum purposes for the remainder of the meeting and for any adjournments of that meeting, unless a new record date for the adjourned meeting is or must be set pursuant to Section 7.6 of these Bylaws.

 

2

 

 

(b) Except as provided in Section 3.4, if a quorum exists, action on a matter by a Voting Group is approved by that Voting Group if the votes cast within the Voting Group favoring the action exceed the votes cast opposing the action, unless the Articles of Incorporation, a provision of these Bylaws that has been adopted pursuant to Section 14-2-1021 of the Code (or any successor provision), or the Code requires a greater number of affirmative votes.

 

2.7 Voting of Shares. Unless otherwise required by the Code or the Articles of Incorporation, each outstanding share of any class or series having voting rights shall be entitled to one vote on each matter that is submitted to a vote of shareholders.

 

2.8 Proxies. A shareholder entitled to vote on a matter may vote in person or by proxy pursuant to an appointment executed in writing by the shareholder or by his or her attorney-in-fact. An appointment of a proxy shall be valid for 11 months from the date of its execution, unless a longer or shorter period is expressly stated in the proxy.

 

2.9 Presiding Officer. Except as otherwise provided in this Section 2.9, the Chairman of the Board, and in his or her absence or disability the President, and in his or her absence or disability the Chief Executive Officer, shall preside at every shareholders' meeting (and any adjournment thereof) as its chairman, if either of them is present and willing to serve. If neither the Chairman of the Board nor the President nor the Chief Executive Officer is present and willing to serve as chairman of the meeting, and if the Chairman of the Board has not designated another person who is present and willing to serve, then a majority of the Corporation's directors present at the meeting shall be entitled to designate a person to serve as chairman. If no director of the Corporation is present at the meeting or if a majority of the directors who are present cannot be established, then a chairman of the meeting shall be selected by a majority vote of (a) the shares present at the meeting that would be entitled to vote in an election of directors, or (b) if no such shares are present at the meeting, then the shares present at the meeting comprising the Voting Group with the largest number of shares present at the meeting and entitled to vote on a matter properly proposed to be considered at the meeting. The chairman of the meeting may designate other persons to assist with the meeting.

 

3

 

 

2.10 Adjournments. At any meeting of shareholders (including an adjourned meeting), a majority of shares of any Voting Group present and entitled to vote at the meeting (whether or not those shares constitute a quorum) may adjourn the meeting, but only with respect to that Voting Group, to reconvene at a specific time and place. If more than one Voting Group is present and entitled to vote on a matter at the meeting, then the meeting may be continued with respect to any such Voting Group that does not vote to adjourn as provided above, and such Voting Group may proceed to vote on any matter to which it is otherwise entitled to do so; provided, however, that if (a) more than one Voting Group is required to take action on a matter at the meeting and (b) any one of those Voting Groups votes to adjourn the meeting (in accordance with the preceding sentence), then the action shall not be deemed to have been taken until the requisite vote of any adjourned Voting Group is obtained at its reconvened meeting. The only business that may be transacted at any reconvened meeting is business that could have been transacted at the meeting that was adjourned, unless further notice of the adjourned meeting has been given in compliance with the requirements for a special meeting that specifies the additional purpose or purposes for which the meeting is called. Nothing contained in this Section 2.10 shall be deemed or otherwise construed to limit any lawful authority of the chairman of a meeting to adjourn the meeting.

 

2.11 Conduct of the Meeting. At any meeting of shareholders, the chairman of the meeting shall be entitled to establish the rules of order governing the conduct of business at the meeting.

 

2.12 Action of Shareholders Without a Meeting. Action required or permitted to be taken at a meeting of shareholders may be taken without a meeting if the action is taken by all shareholders entitled to vote on the action. The action must be evidenced by one or more written consents describing the action taken, signed by all the shareholders entitled to take action without a meeting, and delivered to the Corporation for inclusion in the minutes or filing with the corporate records.

 

2.13 Matters Considered at Annual Meetings. Notwithstanding anything to the contrary in these Bylaws, the only business that may be conducted at an annual meeting of shareholders shall be business brought before the meeting (a) by or at the direction of the Board of Directors prior to the meeting, (b) by or at the direction of the Chairman of the Board, the President, or the Chief Executive Officer or by a shareholder of the Corporation who is entitled to vote with respect to the business and who complies with the notice procedures set forth in this Section 2.13. For business to be brought properly before an annual meeting by a shareholder, the shareholder must have given timely notice of the business in writing to the Secretary of the Corporation. To be timely a shareholder's notice must be delivered or mailed to and received at the principal offices of the Corporation at least 120 days before the anniversary of the date of the proxy statement for the immediately preceding annual meeting of the Corporation. A shareholder's notice to the Secretary shall set forth a brief description of each matter of business the shareholder proposes to bring before the meeting and the reasons for conducting that business at the meeting; the name, as it appears on the Corporation's books and address of the shareholder proposing the business; the series or class and number of shares of the Corporation's stock that are beneficially owned by the shareholder; and any material interest of the shareholder in the proposed business. The Chairman of the meeting shall have the discretion to declare to the meeting that any business proposed by a shareholder to be considered at the meeting is out of order and that such business shall not be transacted at the meeting if (i) the Chairman concludes that the matter has been proposed in a manner inconsistent with this Section 2.13 or (ii) the Chairman concludes that the subject matter of the proposed business is inappropriate for consideration by the shareholders at the meeting.

 

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ARTICLE THREE

Board of Directors

 

3.1 General Powers. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed by, the Board of Directors, subject to any limitation set forth in the Articles of Incorporation, in bylaws approved by the shareholders, or in agreements among all the shareholders that are otherwise lawful.

 

3.2 Number. Election and Term of Office. The number of directors of the Corporation shall be fixed by resolution of the Board of Directors or of the shareholders from time to time; provided, however, that no decrease in the number of directors shall have the effect of shortening the term of an incumbent director. The Board of Directors shall be divided into three classes, Class I, Class II and Class III, as nearly equal in number as possible. The term of office of the Directors in Class I shall expire at the 1998 Annual Meeting of Shareholders. The term of office of the Directors in Class II shall expire at the 1999 Annual Meeting of Shareholders. The term of office of the Directors in Class III shall expire at the 2000 Annual Meeting of Shareholders. At each Annual Meeting of the Shareholders, Directors chosen to succeed those whose terms then expire shall be elected for a term of office expiring at the third succeeding Annual Meeting of Shareholders after the election. When the number of Directors is changed, subject to any requirements of the Code, any newly-created directorships or any decrease in directorships shall be apportioned among the classes by the Board of Directors as to make all classes as nearly equal in number as possible. A director shall hold office until the Annual Meeting of Shareholders for the year in which his or her term expires and until his or her successor shall be elected.

 

3.3 Removal of Directors. The entire Board of Directors or any individual director may be removed only for cause by the shareholders, provided that directors elected by a particular Voting Group may be removed only by the shareholders in that Voting Group. Removal action may be taken only at a shareholders' meeting for which notice of the removal action has been given. A removed director's successor, if any, may be elected at the same meeting to serve the unexpired term.

 

3.4 Vacancies. A vacancy occurring in the Board of Directors may be filled for the unexpired term, unless the shareholders have elected a successor, by the affirmative vote of a majority of the remaining directors, whether or not the remaining directors constitute a quorum; provided, however, that if the vacant office was held by a director elected by a particular Voting Group, only the holders of shares of that Voting Group or the remaining directors elected by that Voting Group shall be entitled to fill the vacancy; provided further, however, that if the vacant office was held by a director elected by a particular Voting Group and there is no remaining director elected by that Voting Group, the other remaining directors or director (elected by another Voting Group or Groups) may fill the vacancy during an interim period before the shareholders of the vacated director's Voting Group act to fill the vacancy. A vacancy or vacancies in the Board of Directors may result from the death, resignation, disqualification, or removal of any director, or from an increase in the number of directors.

 

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3.5 Compensation. Directors may receive such compensation for their services as directors as may be fixed by the Board of Directors from time to time. A director may also serve the Corporation in one or more capacities other than that of director and receive compensation for services rendered in those other capacities.

 

3.6 Committees of the Board of Directors. The Board of Directors may designate from among its members an executive committee or one or more other standing or ad hoc committees, each consisting of one or more directors, who serve at the pleasure of the Board of Directors. Subject to the limitations imposed by the Code, each committee shall have the authority set forth in the resolution establishing the committee or in any other resolution of the Board of Directors specifying, enlarging, or limiting the authority of the committee.

 

3.7 Qualification of Directors. No person elected to serve as a director of the Corporation shall assume office and begin serving unless and until duly qualified to serve, as determined by reference to the Code, the Articles of Incorporation, and any further eligibility requirements established in these Bylaws.

 

3.8 Certain Nomination Requirements. No person may be nominated for election as a director at any annual or special meeting of shareholders unless (a) the nomination has been or is being made pursuant to a recommendation or approval of the Board of Directors of the Corporation or a properly constituted committee of the Board of Directors previously delegated authority to recommend or approve nominees for director; (b) the person is nominated by a shareholder of the Corporation who is entitled to vote for the election of the nominee at the subject meeting, and the nominating shareholder has furnished written notice to the Secretary of the Corporation, at the Corporation's principal office, not later than 14 days before the date of the meeting or 5 days after notice is given pursuant to Section 2.4, whichever is later, and the notice (i) sets forth with respect to the person to be nominated his or her name, age, business and residence addresses, principal business or occupation during the past five years, any affiliation with or material interest in the Corporation or any transaction involving the Corporation, and any affiliation with or material interest in any person or entity having an interest materially adverse to the Corporation, and (ii) is accompanied by the sworn or certified statement of the shareholder that the nominee has consented to being nominated and that the shareholder believes the nominee will stand for election and will serve if elected; or (c) (i) the person is nominated to replace a person previously identified as a proposed nominee (in accordance with the provisions of subpart (b) of this Section 3.8) who has since become unable or unwilling to be nominated or to serve if elected, (ii) the shareholder who furnished such previous identification makes the replacement nomination and delivers to the Secretary of the Corporation (at the time of or prior to making the replacement nomination) an affidavit or other sworn statement affirming that the shareholder had no reason to believe the original nominee would be so unable or unwilling, and (iii) such shareholder also furnishes in writing to the Secretary of the Corporation (at the time of or prior to making the replacement nomination) the same type of information about the replacement nominee as required by subpart (b) of this Section 3.8 to have been furnished about the original nominee. The chairman of any meeting of shareholders at which one or more directors are to be elected, for good cause shown and with proper regard for the orderly conduct of business at the meeting, may waive in whole or in part the operation of this Section 3.8.

 

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ARTICLE FOUR

Meetings of the Board of Directors

 

4.1 Regular Meetings. A regular meeting of the Board of Directors shall be held in conjunction with each annual meeting of shareholders. In addition, the Board of Directors may, by prior resolution, hold regular meetings at other times.

 

4.2 Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board, the President, the Chief Executive Officer, or any two directors in office at that time.

 

4.3 Place of Meetings. Directors may hold their meetings at any place in or outside the State of Georgia that the Board of Directors may establish from time to time.

 

4.4 Notice of Meetings. Directors need not be provided with notice of any regular meeting of the Board of Directors. Unless waived in accordance with Section 4.10, the Corporation shall give at least two days' notice to each director of the date, time, and place of each special meeting. Notice of a meeting shall be deemed to have been given to any director in attendance at any prior meeting at which the date, time, and place of the subsequent meeting was announced.

 

4.5 Quorum. At meetings of the Board of Directors, the majority of the directors then in office shall constitute a quorum for the transaction of business.

 

4.6 Vote Required for Action. If a quorum is present when a vote is taken, the vote of a majority of the directors present at the time of the vote will be the act of the Board of Directors, unless the vote of a greater number is required by the Code, the Articles of Incorporation, or these Bylaws. A director who is present at a meeting of the Board of Directors when corporate action is taken is deemed to have assented to the action taken unless (a) he or she objects at the beginning of the meeting (or promptly upon his or her arrival) to holding the meeting or transacting business at it; (b) his or her dissent or abstention from the action taken is entered in the minutes of the meeting; or (c) he or she delivers written notice of dissent or abstention to the presiding officer of the meeting before its adjournment or to the Corporation immediately after adjournment of the meeting. The right of dissent or abstention is not available to a director who votes in favor of the action taken.

 

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4.7 Participation by Conference Telephone. Members of the Board of Directors may participate in a meeting of the Board by means of conference telephone or similar communications equipment through which all persons participating may hear and speak to each other. Participation in a meeting pursuant to this Section 4.7 shall constitute presence in person at the meeting.

 

4.8 Action by Directors Without a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if a written consent, describing the action taken, is signed by each director and delivered to the Corporation for inclusion in the minutes or filing with the corporate records. The consent may be executed in counterpart, and shall have the same force and effect as a unanimous vote of the Board of Directors at a duly convened meeting.

 

4.9 Adjournments. A meeting of the Board of Directors, whether or not a quorum is present, may be adjourned by a majority of the directors present to reconvene at a specific time and place. It shall not be necessary to give notice to the directors of the reconvened meeting or of the business to be transacted, other than by announcement at the meeting that was adjourned, unless a quorum was not present at the meeting that was adjourned, in which case notice shall be given to directors in the same manner as for a special meeting. At any such reconvened meeting at which a quorum is present, any business may be transacted that could have been transacted at the meeting that was adjourned.

 

4.10 Waiver of Notice. A director may waive any notice required by the Code, the Articles of Incorporation, or these Bylaws before or after the date and time of the matter to which the notice relates, by a written waiver signed by the director and delivered to the Corporation for inclusion in the minutes or filing with the corporate records. Attendance by a director at a meeting shall constitute waiver of notice of the meeting, except where a director at the beginning of the meeting (or promptly upon his or her arrival) objects to holding the meeting or to transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting.

 

 

ARTICLE FIVE

Officers

 

5.1 Offices. The officers of the Corporation shall consist of a President, a Secretary, and a Treasurer, and may include a Chief Executive Officer separate from the President, each of whom shall be elected or appointed by the Board of Directors. The Board of Directors may also elect a Chairman of the Board from among its members. The Board of Directors from time to time may, or may authorize the Chief Executive Officer to, create and establish the duties of other offices and may, or may authorize the Chief Executive Officer to, elect or appoint, or authorize specific senior officers to appoint, the persons who shall hold such other offices, including one or more Vice Presidents (including Executive Vice Presidents, Senior Vice Presidents, Assistant Vice Presidents, and the like), one or more Assistant Secretaries, and one or more Assistant Treasurers. Whether or not so provided by the Board of Directors, the Chairman of the Board or the Chief Executive Officer may appoint one or more Assistant Secretaries, and one or more Assistant Treasurers. Any two or more offices may be held by the same person.

 

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5.2 Term. Each officer shall serve at the pleasure of the Board of Directors (or, if appointed by the Chief Executive Officer or a senior officer pursuant to this Article Five, at the pleasure of the Board of Directors, the Chief Executive Officer, or the senior officer authorized to have appointed the officer) until his or her death, resignation, or removal, or until his or her replacement is elected or appointed in accordance with this Article Five.

 

5.3 Compensation. The compensation of all officers of the Corporation shall be fixed by the Board of Directors or by a committee or officer appointed by the Board of Directors. Officers may serve without compensation.

 

5.4 Removal. All officers (regardless of how elected or appointed) may be removed, with or without cause, by the Board of Directors, and any officer appointed by the Chief Executive Officer or another senior officer may also be removed, with or without cause, by the Chief Executive Officer or by any senior officer authorized to have appointed the officer to be removed. Removal will be without prejudice to the contract rights, if any, of the person removed, but shall be effective notwithstanding any damage claim that may result from infringement of such contract rights.

 

5.5 Chairman of the Board. The Chairman of the Board (if there be one) shall preside at and serve as chairman of meetings of the shareholders and of the Board of Directors (unless another person is selected under Section 2.9 to act as chairman). The Chairman of the Board shall perform other duties and have other authority as may from time to time be delegated by the Board of Directors.

 

5.6 Chief Executive Officer. The Chief Executive Officer shall be charged with the general and active management of the Corporation, shall see that all orders and resolutions of the Board of Directors are carried into effect, shall have the authority to select and appoint employees and agents of the Corporation, and shall, in the absence or disability of the Chairman of the Board, perform the duties and exercise the powers of the Chairman of the Board. The Chief Executive Officer shall perform any other duties and have any other authority as may be delegated from time to time by the Board of Directors, and shall be subject to the limitations fixed from time to time by the Board of Directors.

 

5.7 President. If there shall be no separate Chief Executive Officer of the Corporation, then the President shall be the chief executive officer of the Corporation and shall have all the duties and authority given under these Bylaws to the Chief Executive Officer. The President shall otherwise be the chief operating officer of the Corporation and shall, subject to the authority of the Chief Executive Officer, have responsibility for the conduct and general supervision of the business operations of the Corporation. The President shall perform such other duties and have such other authority as may from time to time be delegated by the Board of Directors or the Chief Executive Officer. In the absence or disability of the Chief Executive Officer, the President shall perform the duties and exercise the powers of the Chief Executive Officer.

 

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5.8 Vice Presidents. The Vice President (if there be one) shall, in the absence or disability of the President, perform the duties and exercise the powers of the President, whether the duties and powers are specified in these Bylaws or otherwise. If the Corporation has more than one Vice President, the one designated by the Board of Directors or the Chief Executive Officer (in that order of precedence) shall act in the event of the absence or disability of the President. Vice Presidents shall perform any other duties and have any other authority as from time to time may be delegated by the Board of Directors, the Chief Executive Officer, or the President.

 

5.9 Secretary. The Secretary shall be responsible for preparing minutes of the meetings of shareholders, directors, and committees of directors and for authenticating records of the Corporation. The Secretary or any Assistant Secretary shall have authority to give all notices required by law or these Bylaws. The Secretary shall be responsible for the custody of the corporate books, records, contracts, and other documents. The Secretary or any Assistant Secretary may affix the corporate seal to any lawfully executed documents requiring it, may attest to the signature of any officer of the Corporation, and shall sign any instrument that requires the Secretary's signature. The Secretary or any Assistant Secretary shall perform any other duties and have any other authority as from time to time may be delegated by the Board of Directors, the Chief Executive Officer, or the President.

 

5.10 Treasurer. Unless otherwise provided by the Board of Directors, the Treasurer shall be responsible for the custody of all funds and securities belonging to the Corporation and for the receipt, deposit, or disbursement of these funds and securities under the direction of the Board of Directors. The Treasurer shall cause full and true accounts of all receipts and disbursements to be maintained and shall make reports of these receipts and disbursements to the Board of Directors, the Chief Executive Officer and President upon request. The Treasurer or Assistant Treasurer shall perform any other duties and have any other authority as from time to time may be delegated by the Board of Directors, the Chief Executive Officer, or the President.

 

 

ARTICLE SIX

Distributions and Dividends

 

Unless the Articles of Incorporation provide otherwise, the Board of Directors, from time to time in its discretion, may authorize or declare distributions or share dividends in accordance with the Code.

 

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ARTICLE SEVEN

Shares

 

7.1 Shares. The Corporation may issue shares of the Corporation with or without certificates. All certificates representing shares of the Corporation shall be in such form as the Board of Directors from time to time may adopt in accordance with the Code. Share certificates, if any, shall be in registered form and shall indicate the date of issue, the name of the Corporation, that the Corporation is organized under the laws of the State of Georgia, the name of the shareholder, and the number and class of shares and designation of the series, if any, represented by the certificate. Each certificate shall be signed by the President or a Vice President (or in lieu thereof, by the Chairman of the Board or Chief Executive Officer, if there be one) and may be signed by the Secretary or an Assistant Secretary; provided, however, that where the certificate is signed (either manually or by facsimile) by a transfer agent, or registered by a registrar, the signatures of those officers may be facsimiles. Within a reasonable time after the issue or transfer of shares without certificates, the Corporation shall send the holder of such shares a written statement as prescribed by the Code.

 

7.2 Rights of Corporation with Respect to Registered Owners. Prior to due presentation for transfer of registration of its shares, the Corporation may treat the registered owner of the shares (or the beneficial owner of the shares to the extent of any rights granted by a nominee certificate on file with the Corporation pursuant to any procedure that may be established by the Corporation in accordance with the Code) as the person exclusively entitled to vote the shares, to receive any dividend or other distribution with respect to the shares, and for all other purposes; and the Corporation shall not be bound to recognize any equitable or other claim to or interest in the shares on the part of any other person, whether or not it has express or other notice of such a claim or interest, except as otherwise provided by law.

 

7.3 Transfers of Shares. Transfers of shares shall be made upon the books of the Corporation kept by the Corporation or by the transfer agent designated to transfer the shares, only upon direction of the person named in the certificate, or, with respect to uncertificated shares, the registered owner of such shares, or by an attorney lawfully constituted in writing, and, if such shares are represented by a certificate or certificates, on surrender of the certificate or certificates for such shares properly endorsed, or for uncertificated shares, upon the presentation of proper evidence of authority to transfer by the record holder. Before any new certificate is issued or before any transfer of uncertificated shares is registered, any old certificate shall be surrendered for cancellation or, in the case of a certificate alleged to have been lost, stolen, or destroyed, the provisions of Section 7.5 of these Bylaws shall have been complied with.

 

7.4 Duty of Corporation to Register Transfer. Notwithstanding any of the provisions of Section 7.3 of these Bylaws, the Corporation is under a duty to register the transfer of its shares only if: (a) the share certificate, if any, is endorsed by the appropriate person or persons; (b) reasonable assurance is given that each required endorsement or other instruction is genuine and effective; (c) the Corporation has no duty to inquire into adverse claims or has discharged any such duty; (d) any applicable law relating to the collection of taxes has been complied with; (e) the transfer is in fact rightful or is to a bona fide purchaser; and (f) the transfer is in compliance with applicable provisions of any transfer restrictions of which the Corporation shall have notice.

 

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7.5 Lost, Stolen, or Destroyed Certificates. Any person claiming a share certificate to be lost, stolen, or destroyed shall make an affidavit or affirmation of this claim in such a manner as the Corporation may require and shall, if the Corporation requires, give the Corporation a bond of indemnity in form and amount, and with one or more sureties satisfactory to the Corporation, as the Corporation may require, whereupon an appropriate new certificate (or uncertificated shares in lieu of a new certificate) may be issued in lieu of the one alleged to have been lost, stolen or destroyed.

 

7.6 Fixing of Record Date. For the purpose of determining shareholders (a) entitled to notice of or to vote at any meeting of shareholders or, if necessary, any adjournment thereof, (b) entitled to receive payment of any distribution or dividend, or (c) for any other proper purpose, the Board of Directors may fix in advance a date as the record date. The record date may not be more than 70 days (and, in the case of a notice to shareholders of a shareholders' meeting, not less than 10 days) prior to the date on which the particular action, requiring the determination of shareholders, is to be taken. A separate record date may be established for each Voting Group entitled to vote separately on a matter at a meeting. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting, unless the Board of Directors shall fix a new record date for the reconvened meeting, which it must do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting.

 

7.7 Record Date if None Fixed. If no record date is fixed as provided in Section 7.6, then the record date for any determination of shareholders that may be proper or required by law shall be, as appropriate, the date on which notice of a shareholders' meeting is mailed, the date on which the Board of Directors adopts a resolution declaring a dividend or authorizing a distribution, or the date on which any other action is taken that requires a determination of shareholders.

 

 

ARTICLE EIGHT

Indemnification

 

 

8.1 Indemnification of Directors. The Corporation shall indemnify and hold harmless any director of the Corporation (an "Indemnified Person") who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, whether formal or informal, including any action or suit by or in the right of the Corporation (for purposes of this Article Eight, collectively, a "Proceeding") because he or she is or was a director, officer, employee, or agent of the Corporation, against any judgment, settlement, penalty, fine, or reasonable expenses (including, but not limited to, attorneys' fees and disbursements, court costs, and expert witness fees) incurred with respect to the Proceeding (for purposes of this Article Eight, a "Liability"), provided, however, that no indemnification shall be made for: (a) any appropriation by a director, in violation of the director's duties, of any business opportunity of the corporation; (b) any acts or omissions of a director that involve intentional misconduct or a knowing violation of law; (c) the types of liability set forth in Code Section 14-2-832; or (d) any transaction from which the director received an improper personal benefit.

 

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8.2 Indemnification of Others. The Board of Directors shall have the power to cause the Corporation to provide to officers, employees, and agents of the Corporation all or any part of the right to indemnification permitted for such persons by appropriate provisions of the Code. Persons to be indemnified may be identified by position or name, and the right of indemnification may be different for each of the persons identified. Each officer, employee, or agent of the Corporation so identified shall be an "Indemnified Person" for purposes of the provisions of this Article Eight.

 

8.3 Other Organizations. The Corporation shall provide to each director, and the Board of Directors shall have the power to cause the Corporation to provide to any officer, employee, or agent, of the Corporation who is or was serving as a director, officer, partner, trustee, employee, or agent of

 

(a) Intelligent Systems Master, L.P., INTS Management Company or any of their current or former affiliates, or

 

(b) another corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise at the Corporation's request

 

all or any part of the right to indemnification and other rights of the type provided under Sections 8.1, 8.2, 8.4, and 8.10 of this Article Eight (subject to the conditions, limitations, and obligations specified in those Sections) permitted for such persons by appropriate provisions of the Code. Persons to be indemnified may be identified by position or name, and the right of indemnification may be different for each of the persons identified. Each person so identified shall be an "Indemnified Person" for purposes of the provisions of this Article Eight.

 

8.4 Advances. Expenses (including, but not limited to, attorneys' fees and disbursements, court costs, and expert witness fees) incurred by an Indemnified Person in defending any Proceeding of the kind described in Sections 8.1 or 8.3, as to an Indemnified Person who is a director of the Corporation, or in Sections 8.2 or 8.3 as to other Indemnified Persons, if the Board of Directors has specified that advancement of expenses be made available to any such Indemnified Person, shall be paid by the Corporation in advance of the final disposition of such Proceeding as set forth herein. The Corporation shall promptly pay the amount of such expenses to the Indemnified Person, but in no event later than 10 days following the Indemnified Person's delivery to the Corporation of a written request for an advance pursuant to this Section 8.4, together with a reasonable accounting of such expenses; provided, however, that the Indemnified Person shall furnish the Corporation a written affirmation of his or her good faith belief that he or she has met the applicable standard of conduct and a written undertaking and agreement to repay to the Corporation any advances made pursuant to this Section 8.4 if it shall be determined that the Indemnified Person is not entitled to be indemnified by the Corporation for such amounts. The Corporation may make the advances contemplated by this Section 8.4 regardless of the Indemnified Person's financial ability to make repayment. Any advances and undertakings to repay pursuant to this Section 8.4 may be unsecured and interest-free.

 

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8.5 Non-Exclusivity. Subject to any applicable limitation imposed by the Code or the Articles of Incorporation, the indemnification and advancement of expenses provided by or granted pursuant to this Article Eight shall not be exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any provision of the Articles of Incorporation, or any Bylaw, resolution, or agreement specifically or in general terms approved or ratified by the affirmative vote of holders of a majority of the shares entitled to be voted thereon.

 

8.6 Insurance. The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the Corporation, or who, while serving in such a capacity, is also or was also serving at the request of the Corporation as a director, officer, trustee, partner, employee, or agent of any corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise, against any Liability that may be asserted against or incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of this Article Eight.

 

8.7 Notice. If the Corporation indemnifies or advances expenses to a director under any of Sections 14-2-851 through 14-2-854 of the Code in connection with a Proceeding by or in the right of the Corporation, the Corporation shall, to the extent required by Section 14-2-1621 or any other applicable provision of the Code, report the indemnification or advance in writing to the shareholders with or before the notice of the next shareholders' meeting.

 

8.8 Security. The Corporation may designate certain of its assets as collateral, provide self-insurance, establish one or more indemnification trusts, or otherwise secure or facilitate its ability to meet its obligations under this Article Eight, or under any indemnification agreement or plan of indemnification adopted and entered into in accordance with the provisions of this Article Eight, as the Board of Directors deems appropriate.

 

8.9 Amendment. Any amendment to this Article Eight that limits or otherwise adversely affects the right of indemnification, advancement of expenses, or other rights of any Indemnified Person hereunder shall, as to such Indemnified Person, apply only to Proceedings based on actions, events, or omissions (collectively, "Post Amendment Events") occurring after such amendment and after delivery of notice of such amendment to the Indemnified Person so affected. Any Indemnified Person shall. as to any Proceeding based on actions, events, or omissions occurring prior to the date of receipt of such notice, be entitled to the right of indemnification, advancement of expenses, and other rights under this Article Eight to the same extent as if such provisions had continued as part of the Bylaws of the Corporation without such amendment. This Section 8.9 cannot be altered, amended, or repealed in a manner effective as to any Indemnified Person (except as to Post Amendment Events) without the prior written consent of such Indemnified Person.

 

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8.10 Agreements. The provisions of this Article Eight shall be deemed to constitute an agreement between the Corporation and each Indemnified Person hereunder. In addition to the rights provided in this Article Eight, the Corporation shall have the power, upon authorization by the Board of Directors, to enter into an agreement or agreements providing to any Indemnified Person indemnification rights substantially similar to those provided in this Article Eight.

 

8.11 Continuing Benefits. The rights of indemnification and advancement of expenses permitted or authorized by this Article Eight shall, unless otherwise provided when such rights are granted or conferred, continue as to a person who has ceased to be a director, officer, employee. or agent and shall inure to the benefit of the heirs, executors, and administrators of such person.

 

8.12 Successors. For purposes of this Article Eight, the term "Corporation" shall include any corporation, joint venture, trust, partnership, or unincorporated business association that is the successor to all or substantially all of the business or assets of this Corporation, as a result of merger, consolidation, sale, liquidation. or otherwise, and any such successor shall be liable to the persons indemnified under this Article Eight on the same terms and conditions and to the same extent as this Corporation.

 

8.13 Severability. Each of the Sections of this Article Eight, and each of the clauses set forth herein, shall be deemed separate and independent, and should any part of any such Section or clause be declared invalid or unenforceable by any court of competent jurisdiction, such invalidity or unenforceability shall in no way render invalid or unenforceable any other part thereof or any separate Section or clause of this Article Eight that is not declared invalid or unenforceable.

 

8.14 Additional Indemnification. In addition to the specific indemnification rights set forth herein, the Corporation shall indemnify each of its directors and such of its officers as have been designated by the Board of Directors to the full extent permitted by action of the Board of Directors without shareholder approval under the Code or other laws of the State of Georgia as in effect from time to time.

 

 

ARTICLE NINE

Miscellaneous

 

9.1 Inspection of Books and Records. The Board of Directors shall have the power to determine which accounts, books, and records of the Corporation shall be available for shareholders to inspect or copy, except for those books and records required by the Code to be made available upon compliance by a shareholder with applicable requirements, and shall have the power to fix reasonable rules and regulations (including confidentiality restrictions and procedures) not in conflict with applicable law for the inspection and copying of accounts, books, and records that by law or by determination of the Board of Directors are made available. Unless required by the Code or otherwise provided by the Board of Directors, a shareholder of the Corporation holding less than two percent of the total shares of the Corporation then outstanding shall have no right to inspect the books and records of the Corporation.

 

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9.2 Fiscal Year. The Board of Directors is authorized to fix the fiscal year of the Corporation and to change the fiscal year from time to time as it deems appropriate.

 

9.3 Corporate Seal. The corporate seal will be in such form as the Board of Directors may from time to time determine. The Board of Directors may authorize the use of one or more facsimile forms of the corporate seal. The corporate seal need not be used unless its use is required by law, by these Bylaws, or by the Articles of Incorporation.

 

9.4 Annual Statements. Not later than four months after the close of each fiscal year, and in any case prior to the next annual meeting of shareholders, the Corporation shall prepare (a) a balance sheet showing in reasonable detail the financial condition of the Corporation as of the close of its fiscal year, and (b) a profit and loss statement showing the results of its operations during its fiscal year. Upon receipt of written request, the Corporation promptly shall mail to any shareholder of record a copy of the most recent such balance sheet and profit and loss statement, in such form and with such information as the Code may require.

 

9.5 Notice. (a) Whenever these Bylaws require notice to be given to any shareholder or to any director, the notice may be given by mail, in person, by courier delivery, by telephone, or by telecopier, telegraph, or similar electronic means. Whenever notice is given to a shareholder or director by mail, the notice shall be sent by depositing the notice in a post office or letter box in a postage-prepaid, sealed envelope addressed to the shareholder or director at his or her address as it appears on the books of the Corporation. Any such written notice given by mail shall be effective: (i) if given to shareholders, at the time the same is deposited in the United States mail, and (ii) in all other cases, at the earliest of (x) when received or when delivered, properly addressed, to the addressee's last known principal place of business or residence, (y) five days after its deposit in the mail, as evidenced by the postmark, if mailed with first-class postage prepaid and correctly addressed, or (z) on the date shown on the return receipt, if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee. Whenever notice is given to a shareholder or director by any means other than mail, the notice shall be deemed given when received.

 

(b) In calculating time periods for notice, when a period of time measured in days, weeks, months, years, or other measurement of time is prescribed for the exercise of any privilege or the discharge of any duty, the first day shall not be counted but the last day shall be counted.

 

16

 

 

ARTICLE TEN

Amendments

 

Except as otherwise provided under the Code, the Board of Directors shall have the power to alter, amend, or repeal these Bylaws or adopt new Bylaws. Any Bylaws adopted by the Board of Directors may be altered, amended, or repealed, and new Bylaws adopted, by the shareholders. The shareholders may prescribe in adopting any Bylaw or Bylaws that the Bylaw or Bylaws so adopted shall not be altered, amended, or repealed by the Board of Directors.

 

17

EX-31.1 3 ex_141907.htm EXHIBIT 31.1 ex_141907.htm

Exhibit 31.1

 

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, J. Leland Strange, certify that:

 

 

1.

I have reviewed this report on Form 10-Q of Intelligent Systems Corporation;

 

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

 

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

 

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

 

a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

 

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 Date: May 3, 2019

 

 

 

 

 

 

 

 

 

  /s/ J. Leland Strange

 

 

 

J. Leland Strange 

 

 

 

Chairman of the Board, President 

 

    and Chief Executive Officer  

  

 

 

EX-31.2 4 ex_141909.htm EXHIBIT 31.2 ex_141909.htm

Exhibit 31.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Matthew A. White, certify that:

 

 

1.

I have reviewed this report on Form 10-Q of Intelligent Systems Corporation;

 

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

 

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

 

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

 

a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

 

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 Date: May 3, 2019

 

 

 

 

 

 

 

 

 

  /s/ Matthew A. White  

 

 

 

Matthew A. White

 

 

 

Chief Financial Officer

 

  

 

EX-32.1 5 ex_141910.htm EXHIBIT 32.1 ex_141910.htm

Exhibit 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

 

 

Each of the undersigned officers of Intelligent Systems Corporation (the “Company”) hereby certifies to his or her knowledge that the Company’s report on Form 10-Q for the period ended March 31, 2019 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

 Date: May 3, 2019

 

  /s/ J. Leland Strange

 

 

 

J. Leland Strange 

 

 

 

Chairman of the Board, President 

 

   

and Chief Executive Officer

 

 

 

 

   

  /s/ Matthew A. White   

 
   

Matthew A. White

 
   

Chief Financial Officer

 

  

 

 

A signed original of this written statement required by Section 906 has been provided to Intelligent Systems Corporation and will be retained by Intelligent Systems Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

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font-family: times new roman; font-size: 10pt"><table border="0" cellpadding="0" cellspacing="0" style="margin-right: 10%; margin-left: 45pt; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px; min-; min-width: 700px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 66%; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;"><div style="display: inline; font-weight: bold;">Three months</div><div style="display: inline; font-weight: bold;"> ended </div><div style="display: inline; font-weight: bold;">March</div><div style="display: inline; font-weight: bold;"> 31,</div><div style="display: inline; font-style: italic;"> </div><div style="display: inline; font-style: italic;">(in thousands)</div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td colspan="2" style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">2019</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td colspan="2" style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">2018</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">License</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">800</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">95</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Professional services</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">3,964</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2,109</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Processing and maintenance</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,811</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,624</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Third party</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">391</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">230</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Total</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">6,966</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">4,058</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px;">&nbsp;</td> </tr> </table></div><div style="display: inline; font-family: times new roman; font-size: 10pt"><table border="0" cellpadding="0" cellspacing="0" style="margin-right: 10%; margin-left: 45pt; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px; min-; min-width: 700px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 66%; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;"><div style="display: inline; font-weight: bold;">Three months</div><div style="display: inline; font-weight: bold;"> ended </div><div style="display: inline; font-weight: bold;">March</div><div style="display: inline; font-weight: bold;"> 31,</div><div style="display: inline; font-style: italic;"> </div><div style="display: inline; font-style: italic;">(in thousands)</div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td colspan="2" style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">2019</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td colspan="2" style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">2018</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">European Union</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,219</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">836</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">United States</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">5,747</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">3,222</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Total</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">6,966</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">4,058</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px;">&nbsp;</td> </tr> </table></div> <div style="display: inline; font-family: times new roman; font-size: 10pt"><table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:5pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;"> <div style=" text-transform:uppercase;font-family:'Times New Roman', Times, serif;margin-right:5.85pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">4.</div></div></div> </td> <td style="vertical-align:top;"> <div style=" text-transform:uppercase;font-family:'Times New Roman', Times, serif;margin-right:5.85pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;"><div style="display: inline; font-weight: bold;">Stock-based Compensation </div></div> </td> </tr> </table> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:5.85pt;margin-top:0pt;text-align:justify;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">At <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019, </div>we have <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> stock-based compensation plans in effect. We record compensation cost related to unvested stock awards by recognizing the unamortized grant date fair value on a straight line basis over the vesting periods of each award. We have estimated forfeiture rates based on our historical experience. Stock option compensation expense for the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> month periods ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019 </div>and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2018</div> has been recognized as a component of general and administrative expenses in the accompanying Consolidated Financial Statements. We recorded <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$25,000</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$13,000</div> of stock-based compensation expense during the quarters ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019 </div>and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2018,</div> respectively.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"></div> <div style=" font-family: 'Times New Roman', Times, serif; font-size: 10pt; margin: 0pt; text-align: left">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">As of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019, </div>there is <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$401,000</div> of unrecognized compensation cost related to stock options. We granted <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">30,000</div> options during the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019. </div>The following table summarizes options as of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019:</div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div> <table style="margin-right: 5%; margin-left: 36pt; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 8.1pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:8.1pt;margin-right:11.6pt;margin-top:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;"># of Shares</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 12.75pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:12.75pt;margin-right:9.35pt;margin-top:0pt;text-align:center;text-indent:-0.65pt;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Wgt Avg</div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:12.75pt;margin-right:9.35pt;margin-top:0pt;text-align:center;text-indent:-0.65pt;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Exercise </div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:12.75pt;margin-right:9.35pt;margin-top:0pt;text-align:center;text-indent:-0.65pt;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Price</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 8.9pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:8.9pt;margin-right:8.95pt;margin-top:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Wgt Avg</div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:8.9pt;margin-right:8.95pt;margin-top:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Remaining </div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:8.9pt;margin-right:8.95pt;margin-top:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Contractual </div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:8.9pt;margin-right:8.95pt;margin-top:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Life in Years</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 9.1pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:9.1pt;margin-right:10.9pt;margin-top:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Aggregate</div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:9.1pt;margin-right:10.9pt;margin-top:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Intrinsic </div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:9.1pt;margin-right:10.9pt;margin-top:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Value</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 48%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Outstanding at March 31, 2019</div> </td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 10%; border-bottom: 1px none rgb(0, 0, 0); text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 8.1pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">194,500</div></td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 10%; border-bottom: 1px none rgb(0, 0, 0); text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">5.07</div></td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 10%; border-bottom: 1px none rgb(0, 0, 0); text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">4.9</div></td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 8.95pt;">$</td> <td style="width: 10%; border-bottom: 1px none rgb(0, 0, 0); text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 8.95pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">5,226,180</div></td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Vested and exercisable at March 31, 2019</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 8.1pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">146,000</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1.83</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">3.4</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 8.95pt;">$</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 8.95pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">4,395,480</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> </table> </div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">The estimated fair value of options granted is calculated using the Black-Scholes option pricing model with assumptions as previously disclosed in our <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2018</div> Form <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">10</div>-K.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the company&#x2019;s closing stock price on the last trading day of the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">first</div> quarter of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2019</div> and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019. </div>The amount of aggregate intrinsic value will change based on the market value of the company&#x2019;s stock.</div></div> 0.23 0.10 0.23 0.10 -1000 1000 1285000 1145000 401000 <div style="display: inline; font-family: times new roman; font-size: 10pt"><table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:5pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;"> <div style=" text-transform:uppercase;font-family:'Times New Roman', Times, serif;margin-right:5.85pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">6.</div></div></div> </td> <td style="vertical-align:top;"> <div style=" text-transform:uppercase;font-family:'Times New Roman', Times, serif;margin-right:5.85pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;"><div style="display: inline; font-weight: bold;">Fair Value Measurements</div></div> </td> </tr> </table> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:5.85pt;margin-top:0pt;text-align:justify;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">In determining fair value, the company uses quoted market prices in active markets. GAAP establishes a fair value measurement framework, provides a single definition of fair value, and requires expanded disclosure summarizing fair value measurements. GAAP emphasizes that fair value is a market-based measurement, <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> an entity specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing an asset or liability.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable input be used when available. Observable inputs are based on data obtained from sources independent of the company that market participants would use in pricing the asset or liability. Unobservable inputs are inputs that reflect the company&#x2019;s assumptions about the estimates market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">The hierarchy is measured in <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> levels based on the reliability of inputs:</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:23pt;">&nbsp;</td> <td style="width:5pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;">&#x2022;</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;">Level <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1</div></div> </td> </tr> </table> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. Valuation adjustments and block discounts are <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> applied to Level <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1</div> instruments.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:23pt;">&nbsp;</td> <td style="width:5pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;">&#x2022;</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;">Level <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2</div></div> </td> </tr> </table> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">Valuations based on quoted prices in less active, dealer or broker markets. Fair values are primarily obtained from <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">third</div> party pricing services for identical or comparable assets or liabilities.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"></div> <div style=" font-family: 'Times New Roman', Times, serif; font-size: 10pt; margin: 0pt; text-align: left">&nbsp;</div> <table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:23pt;">&nbsp;</td> <td style="width:5pt;vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;">&#x2022;</div> </td> <td style="vertical-align:top;"> <div style=" font-family:'Times New Roman', Times, serif;margin-right:0pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;">Level <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">3</div></div> </td> </tr> </table> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">Valuations derived from other valuation methodologies, including pricing models, discounted cash flow models and similar techniques, and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> based on market, exchange, dealer, or broker-traded transactions. Level <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">3</div> valuations incorporate certain assumptions and projections that are <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> observable in the market and significant professional judgment is needed in determining the fair value assigned to such assets or liabilities.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">Our available-for-sale investments are classified within Level <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1</div> of the valuation hierarchy.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">The fair value of equity method and cost method investments has <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> been determined as it was impracticable to do so due to the fact that the investee companies are relatively small, early stage private companies for which there is <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">no</div> comparable valuation data available without unreasonable time and expense.</div></div> <div style="display: inline; font-family: times new roman; font-size: 10pt"><table border="0" cellpadding="0" cellspacing="0" style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;"> <tr> <td style="width:5pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;"> <div style=" text-transform:uppercase;font-family:'Times New Roman', Times, serif;margin-right:5.7pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">5.</div></div></div> </td> <td style="vertical-align:top;"> <div style=" text-transform:uppercase;font-family:'Times New Roman', Times, serif;margin-right:5.7pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;"><div style="display: inline; font-weight: bold;">Fair Value of Financial Instruments</div></div> </td> </tr> </table> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:5.7pt;margin-top:0pt;text-align:justify;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">The carrying value of cash, marketable securities, accounts receivable, accounts payable and certain other financial instruments (such as accrued expenses, and other current liabilities) included in the accompanying consolidated balance sheets approximates their fair value principally due to the short-term maturity of these instruments.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash, marketable securities and trade accounts. Our available cash is held in accounts managed by <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">third</div>-party financial institutions. Cash <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> may </div>exceed the Federal Deposit Insurance Corporation, or FDIC, insurance limits. While we monitor cash balances on a regular basis and adjust the balances as appropriate, these balances could be impacted if the underlying financial institutions fail. To date, we have experienced <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">no</div> loss or lack of access to our cash; however, we can provide <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">no</div> assurances that access to our cash will <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> be impacted by adverse conditions in the financial markets.</div></div> <div style="display: inline; font-family: times new roman; font-size: 10pt"><table border="0" cellpadding="0" cellspacing="0" style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;"> <tr> <td style="width:5pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;"> <div style=" text-transform:uppercase;font-family:'Times New Roman', Times, serif;margin-right:5.8pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">3.</div></div></div> </td> <td style="vertical-align:top;"> <div style=" text-transform:uppercase;font-family:'Times New Roman', Times, serif;margin-right:5.8pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;"><div style="display: inline; font-weight: bold;">Notes Receivable </div></div> </td> </tr> </table> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:0pt;margin-top:0pt;text-align:justify;text-indent:-18pt;"><div style="display: inline; font-style: italic;">&nbsp;</div></div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">In the quarter ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> September 30, 2017, </div>we entered into a Loan Agreement with a privately-held identity and professional services company with ties to the FinTech industry. We committed to lend up to <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$1,500,000</div> all of which has been advanced as of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019. </div>The loan bears interest at the rate of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">6.0</div> percent annually with the maturity date for each Promissory Note on the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">fourth</div> anniversary of funding of such Promissory Note, extendable by <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">one</div> additional year at the borrower&#x2019;s election. We are entitled to purchase, at a nominal price, certain Warrant Units in conjunction with each advance. Upon exercising the Warrant Units, we are entitled to receive up to <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">fourteen</div> percent ownership of Common A Units in the company.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">During <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2018,</div> we advanced <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$550,000</div> on <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> separate simple Promissory Note(s) and in <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2019</div> we advanced an additional <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$500,000</div> to the aforementioned identity and professional services company. The Notes bear interest at the rate of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">6.0</div> percent annually with an original maturity date <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months from the date of funding the Notes. In <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 2019, </div>the parties agreed to extend the maturity date of these Promissory Notes to <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> December 31, 2020.</div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">In the quarter ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2018, </div>we entered into a Convertible Loan Agreement with a private limited India based company in the FinTech industry. We committed to lend up to <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$435,000</div> with an initial advance of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$235,000.</div> The loan bears interest at the rate of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">5.0</div> percent annually with the maturity date on the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">third</div> anniversary of funding of such Promissory Note. We are entitled to convert the principal on the initial Note for up to <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">ten</div> percent ownership of shares of the company.</div></div> 594000 473000 2731000 893000 -19000 <div style="display: inline; font-family: times new roman; font-size: 10pt"><table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:5pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;"> <div style=" text-transform:uppercase;font-family:'Times New Roman', Times, serif;margin-right:6pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">8.</div></div></div> </td> <td style="vertical-align:top;"> <div style=" text-transform:uppercase;font-family:'Times New Roman', Times, serif;margin-right:6pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;"><div style="display: inline; font-weight: bold;">Income Taxes </div></div> </td> </tr> </table> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:6pt;margin-top:0pt;text-align:justify;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">We recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are recognized, net of a valuation allowance, for the estimated future tax effects of deductible temporary differences and tax credit carry-forwards. A valuation allowance against deferred tax assets is recorded when, and if, based upon available evidence, it is more likely than <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> that some or all deferred tax assets will <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> be realized.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">There were <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">no</div> </div>unrecognized tax benefits at <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019 </div>and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> December 31, 2018. </div>Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. There were <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">no</div> </div></div></div>accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the periods presented. We have determined we have <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">no</div> </div>uncertain tax positions.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt; background-color: rgba(0, 0, 0, 0); color: rgb(0, 0, 0);">We file a consolidated U.S. federal income tax return for all subsidiaries in which our ownership equals or exceeds <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">80%,</div> as well as individual subsidiary returns in various states and foreign jurisdictions. With few exceptions we are <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">no</div> longer subject to U.S. federal, state and local or foreign income tax examinations by taxing authorities for years before <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2013.</div></div></div> 659000 -192000 -42000 1716000 56000 7000 140000 334000 -110000 2657000 1061000 -7000 37000 34000 <div style="display: inline; font-family: times new roman; font-size: 10pt"><table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:5pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;"> <div style=" text-transform:uppercase;font-family:'Times New Roman', Times, serif;margin-right:5.7pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">7.</div></div></div> </td> <td style="vertical-align:top;"> <div style=" text-transform:uppercase;font-family:'Times New Roman', Times, serif;margin-right:5.7pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;"><div style="display: inline; font-weight: bold;">Commitments and Contingencies </div></div> </td> </tr> </table> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:5.7pt;margin-top:0pt;text-align:justify;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:5.7pt;margin-top:0pt;text-align:justify;"><div style="display: inline; font-style: italic;">Leases</div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:5.7pt;margin-top:0pt;text-align:justify;"><div style="display: inline; font-style: italic;">&nbsp;</div></div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">We have noncancellable operating leases for offices and data centers expiring at various dates through <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> June 2022. </div>These operating leases are included in "Other long-term assets" on the Company's <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019 </div>Consolidated Balance Sheet and represent the Company&#x2019;s right to use the underlying asset for the lease term. The Company&#x2019;s obligation to make lease payments are included in "other current liabilities" and "Long-term lease obligation" on the Company's <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019 </div>Consolidated Balance Sheet. Based on the present value of the lease payments for the remaining lease term of the Company's existing leases, the Company recognized right-of-use assets and lease liabilities for operating leases of approximately <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$1,258,000</div> on <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> January 1, 2019. </div>Operating lease right-of-use assets and liabilities commencing after <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> January 1, 2019 </div>are recognized at commencement date based on the present value of lease payments over the lease term. As of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019, </div>total right-of-use assets and operating lease liabilities were approximately <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$1,131,000.</div> Because the rate implicit in each lease is <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments. The weighted average discount rate used to determine our lease liabilities was <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">5.5%</div> as of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019. </div>The weight average remaining lease term as of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019 </div>was <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2</div> years.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:5.7pt;margin-top:0pt;text-align:justify;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;"><div style="display: inline; font-style: italic;">Legal Matters</div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:5.7pt;margin-top:0pt;text-align:justify;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">There are <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">no</div> pending or threatened legal proceedings. However, in the ordinary course of business, from time to time we <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> may </div>be involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. We accrue for unpaid legal fees for services performed to date.</div></div> 33934000 29304000 5114000 3272000 744000 111000 0 0 760000 760000 379000 349000 38000 68000 59000 -612000 -655000 3706000 -3187000 2072000 893000 893000 2072000 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;"><div style="display: inline; font-style: italic;">Accounting Pronouncements</div><div style="display: inline; font-style: italic;"> </div><div style="display: inline; font-style: italic;">Adopted</div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:7.7pt;margin-top:0pt;text-align:justify;"><div style="display: inline; font-style: italic;">&nbsp;</div></div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">In <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> February 2016, </div>the FASB issued ASU <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2016</div>-<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">02,</div> Leases (Topic <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">842</div>) in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under prior accounting guidance. ASU <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2016</div>-<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">02</div> requires that a lessee should recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term on the balance sheet. We adopted ASU <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2016</div>-<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">02</div> in the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">first</div> quarter of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2019</div> utilizing the modified retrospective transition method at the beginning of the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">first</div> quarter of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2019.</div> We have elected the package of practical expedients, which allows the Company <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> to reassess (<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1</div>) whether any expired or existing contracts as of the adoption date are or contain a lease, (<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2</div>) lease classification for any expired or existing leases as of the adoption date, (<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">3</div>) initial direct costs for any existing leases as of the adoption date and (<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">4</div>) the application of hindsight when determining lease term and assessing impairment of right-of-use assets. The adoption of the new standard on <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> January 1, 2019, </div>resulting in a lease obligation and related right-of-use asset of approximately <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$1,258,000.</div> The impact on the statement of operations was <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> material.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">We have considered all other recently issued accounting pronouncements and do <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> believe the adoption of such pronouncements will have a material impact on our Consolidated Financial Statements.</div></div></div></div> 2605000 821000 1258000 1131000 1258000 670000 1258000 1258000 1131000 0.055 P2Y <div style="display: inline; font-family: times new roman; font-size: 10pt"><table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:5pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;"> <div style=" text-transform:uppercase;font-family:'Times New Roman', Times, serif;margin-right:7.7pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1.</div></div></div> </td> <td style="vertical-align:top;"> <div style=" text-transform:uppercase;font-family:'Times New Roman', Times, serif;margin-right:7.7pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;"><div style="display: inline; font-weight: bold;">SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</div></div> </td> </tr> </table> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:7.7pt;margin-top:0pt;text-align:justify;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:7.7pt;margin-top:0pt;text-align:justify;"><div style="display: inline; font-style: italic;">Basis</div><div style="display: inline; font-style: italic;"> </div><div style="display: inline; font-style: italic;">of</div><div style="display: inline; font-style: italic;"> </div><div style="display: inline; font-style: italic;">Presentation</div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:7.7pt;margin-top:0pt;text-align:justify;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">Throughout this report, the terms &#x201c;we&#x201d;, &#x201c;us&#x201d;, &#x201c;ours&#x201d;, &#x201c;ISC&#x201d; and &#x201c;company&#x201d; refer to Intelligent Systems Corporation, including its wholly-owned and majority-owned subsidiaries. The unaudited Consolidated Financial Statements presented in this Form <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">10</div>-Q have been prepared in accordance with accounting principles generally accepted in the United States applicable to interim financial statements. Accordingly, they do <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> include all of the information and notes required for complete financial statements. In the opinion of ISC management, these Consolidated Financial Statements contain all adjustments (which comprise only normal and recurring accruals) necessary to present fairly the financial position and results of operations as of and for the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> month periods ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019 </div>and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2018.</div> The interim results for the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019 </div>are <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> necessarily indicative of the results to be expected for the full year. These statements should be read in conjunction with our Consolidated Financial Statements and notes thereto for the fiscal year ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> December 31, 2018, </div>as filed in our Annual Report on Form <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">10</div>-K.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">There have been <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">no</div> material changes in the Company&#x2019;s significant accounting policies, other than the adoption of accounting standards update (&#x201c;ASU&#x201d;) <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2016</div>-<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">02,</div> Leases (Topic <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">842</div>) related to the accounting for leases, in the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">first</div> quarter of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2019</div> as described below, as compared to the significant accounting policies described in the Company&#x2019;s Annual Report on Form <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">10</div>-K for the year ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> December 31, 2018.</div></div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;"><br /> <div style="display: inline; font-style: italic;">Accounting Pronouncements</div><div style="display: inline; font-style: italic;"> </div><div style="display: inline; font-style: italic;">Adopted</div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:7.7pt;margin-top:0pt;text-align:justify;"><div style="display: inline; font-style: italic;">&nbsp;</div></div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">In <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> February 2016, </div>the FASB issued ASU <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2016</div>-<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">02,</div> Leases (Topic <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">842</div>) in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under prior accounting guidance. ASU <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2016</div>-<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">02</div> requires that a lessee should recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term on the balance sheet. We adopted ASU <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2016</div>-<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">02</div> in the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">first</div> quarter of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2019</div> utilizing the modified retrospective transition method at the beginning of the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">first</div> quarter of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2019.</div> We have elected the package of practical expedients, which allows the Company <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> to reassess (<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1</div>) whether any expired or existing contracts as of the adoption date are or contain a lease, (<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2</div>) lease classification for any expired or existing leases as of the adoption date, (<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">3</div>) initial direct costs for any existing leases as of the adoption date and (<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">4</div>) the application of hindsight when determining lease term and assessing impairment of right-of-use assets. The adoption of the new standard on <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> January 1, 2019, </div>resulting in a lease obligation and related right-of-use asset of approximately <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,258,000</div>.</div> The impact on the statement of operations was <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> material.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">We have considered all other recently issued accounting pronouncements and do <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> believe the adoption of such pronouncements will have a material impact on our Consolidated Financial Statements.</div></div> 1092000 1202000 1637000 504000 1000 1000 -1000 -1000 -1000 1000 -17000 -17000 1582000 719000 126000 72000 550000 500000 235000 112000 170000 59000 2072000 893000 1445000 1513000 1195000 953000 12947000 10875000 800000 95000 3964000 2109000 1811000 1624000 391000 230000 6966000 4058000 1219000 836000 5747000 3222000 6166000 3963000 800000 95000 <div style="display: inline; font-family: times new roman; font-size: 10pt"><table style=";font-family:'Times New Roman', Times, serif;font-size:10pt; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr> <td style="width:5pt;">&nbsp;</td> <td style="width:18pt;vertical-align:top;"> <div style=" text-transform:uppercase;font-family:'Times New Roman', Times, serif;margin-right:5.8pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2.</div></div></div> </td> <td style="vertical-align:top;"> <div style=" text-transform:uppercase;font-family:'Times New Roman', Times, serif;margin-right:5.8pt;margin-top:0pt;text-align:justify;margin-bottom:0pt;font-size:10pt;"><div style="display: inline; font-weight: bold;">REVENUE</div><div style="display: inline; font-style: italic;"> </div></div> </td> </tr> </table> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:0pt;margin-top:0pt;text-align:justify;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:0pt;margin-top:0pt;text-align:justify;"><div style="display: inline; font-style: italic;">Disaggregation of Revenue</div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:0pt;margin-top:0pt;text-align:justify;"><div style="display: inline; font-style: italic;">&nbsp;</div></div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">In the following table, revenue is disaggregated by type of revenue for the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019 </div>and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2018:</div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:0pt;margin-top:0pt;text-align:justify;">&nbsp;</div> <div> <table style="margin-right: 10%; margin-left: 45pt; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 66%; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;"><div style="display: inline; font-weight: bold;">Three months</div><div style="display: inline; font-weight: bold;"> ended </div><div style="display: inline; font-weight: bold;">March</div><div style="display: inline; font-weight: bold;"> 31,</div><div style="display: inline; font-style: italic;"> </div><div style="display: inline; font-style: italic;">(in thousands)</div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td colspan="2" style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">2019</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td colspan="2" style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">2018</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">License</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">800</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">95</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Professional services</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">3,964</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2,109</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Processing and maintenance</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,811</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,624</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Third party</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">391</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">230</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Total</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">6,966</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">4,058</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px;" nowrap="nowrap">&nbsp;</td> </tr> </table> </div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:5.8pt;margin-top:0pt;text-align:justify;">&nbsp;</div> <div style=" font-family: 'Times New Roman', Times, serif; font-size: 10pt; margin: 0pt; text-align: left"></div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">Foreign revenues are based on the location of the customer. Revenues from customers by geographic areas for the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019 </div>and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2018</div> are as follows:</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&nbsp;</div> <div> <table style="margin-right: 10%; margin-left: 45pt; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px; min-width: 700px;" cellspacing="0" cellpadding="0" border="0"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 66%; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;"><div style="display: inline; font-weight: bold;">Three months</div><div style="display: inline; font-weight: bold;"> ended </div><div style="display: inline; font-weight: bold;">March</div><div style="display: inline; font-weight: bold;"> 31,</div><div style="display: inline; font-style: italic;"> </div><div style="display: inline; font-style: italic;">(in thousands)</div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td colspan="2" style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">2019</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td colspan="2" style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">2018</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">European Union</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,219</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">836</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">United States</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">5,747</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">3,222</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;" nowrap="nowrap">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Total</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">6,966</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);" nowrap="nowrap">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">4,058</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px;" nowrap="nowrap">&nbsp;</td> </tr> </table> </div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:23.25pt;margin-right:0pt;margin-top:0pt;text-align:justify;"><div style="display: inline; font-style: italic;">&nbsp;</div></div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;"><div style="display: inline; font-style: italic;">Concentration</div><div style="display: inline; font-style: italic;"> of Revenue</div></div> <div style=" font-family: 'Times New Roman', Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">&nbsp;</div> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 5pt 0pt 23pt; text-align: justify; text-indent: 0pt;">The following table indicates the percentage of consolidated revenue represented by each customer that represented more than <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">10</div> percent of consolidated revenue in the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> month periods ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019 </div>and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2018.</div> Most of our customers have multi-year contracts with recurring revenue as well as professional services fees that vary by period depending on their business needs.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div> <table style="margin: 0pt auto 0pt 36pt; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px; min-width: 700px;" cellspacing="0pt" cellpadding="0pt"> <tr style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="6" rowspan="1" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; text-align: center;"><div style="display: inline; font-weight: bold;">Three Months Ended March 31,</div></td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td colspan="2" style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:0pt;margin-right:29.25pt;margin-top:0pt;text-align:right;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">2019</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td colspan="2" style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:0pt;margin-right:29.65pt;margin-top:0pt;text-align:right;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">2018</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <td style="border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 66%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Customer A</div> </td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 14%; border-bottom: 1px none rgb(0, 0, 0); text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">47.8</div></td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">%</td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 14%; border-bottom: 1px none rgb(0, 0, 0); text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">27.3</div></td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">%</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Customer B</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">17.1</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">%</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">20.3</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;" nowrap="nowrap">%</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Customer C</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2.7</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);" nowrap="nowrap">%</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">11.1</div></td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px;" nowrap="nowrap">%</td> </tr> </table> </div></div> <div style="display: inline; font-family: times new roman; font-size: 10pt"><table cellpadding="0pt" cellspacing="0pt" style="margin: 0pt auto 0pt 36pt; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px; min-; min-width: 700px;"> <tr style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="6" rowspan="1" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; text-align: center;"><div style="display: inline; font-weight: bold;">Three Months Ended March 31,</div></td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td colspan="2" style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:0pt;margin-right:29.25pt;margin-top:0pt;text-align:right;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">2019</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td colspan="2" style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:0pt;margin-right:29.65pt;margin-top:0pt;text-align:right;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">2018</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <td style="border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 66%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Customer A</div> </td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 14%; border-bottom: 1px none rgb(0, 0, 0); text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">47.8</div></td> <td nowrap="nowrap" style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">%</td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 14%; border-bottom: 1px none rgb(0, 0, 0); text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">27.3</div></td> <td nowrap="nowrap" style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">%</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Customer B</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">17.1</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">%</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">20.3</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">%</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Customer C</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2.7</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">%</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&nbsp;</td> <td style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">11.1</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px;">%</td> </tr> </table></div> 25000 13000 30000 5226180 194500 5.07 4395480 146000 1.83 <div style="display: inline; font-family: times new roman; font-size: 10pt"><table border="0" cellpadding="0" cellspacing="0" style="margin-right: 5%; margin-left: 36pt; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px; min-; min-width: 700px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 8.1pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:8.1pt;margin-right:11.6pt;margin-top:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;"># of Shares</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 12.75pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:12.75pt;margin-right:9.35pt;margin-top:0pt;text-align:center;text-indent:-0.65pt;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Wgt Avg</div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:12.75pt;margin-right:9.35pt;margin-top:0pt;text-align:center;text-indent:-0.65pt;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Exercise </div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:12.75pt;margin-right:9.35pt;margin-top:0pt;text-align:center;text-indent:-0.65pt;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Price</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 8.9pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:8.9pt;margin-right:8.95pt;margin-top:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Wgt Avg</div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:8.9pt;margin-right:8.95pt;margin-top:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Remaining </div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:8.9pt;margin-right:8.95pt;margin-top:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Contractual </div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:8.9pt;margin-right:8.95pt;margin-top:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Life in Years</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 9.1pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:9.1pt;margin-right:10.9pt;margin-top:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Aggregate</div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:9.1pt;margin-right:10.9pt;margin-top:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Intrinsic </div></div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin-bottom:0pt;margin-left:9.1pt;margin-right:10.9pt;margin-top:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">Value</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 48%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Outstanding at March 31, 2019</div> </td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 10%; border-bottom: 1px none rgb(0, 0, 0); text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 8.1pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">194,500</div></td> <td nowrap="nowrap" style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 10%; border-bottom: 1px none rgb(0, 0, 0); text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">5.07</div></td> <td nowrap="nowrap" style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 10%; border-bottom: 1px none rgb(0, 0, 0); text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">4.9</div></td> <td nowrap="nowrap" style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 8.95pt;">$</td> <td style="width: 10%; border-bottom: 1px none rgb(0, 0, 0); text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 8.95pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">5,226,180</div></td> <td nowrap="nowrap" style="width: 1%; border-bottom: 1px none rgb(0, 0, 0); font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-bottom: 0pt; margin-top: 0pt;">Vested and exercisable at March 31, 2019</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 8.1pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">146,000</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1.83</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">3.4</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 8.95pt;">$</td> <td style="width: 10%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 8.95pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">4,395,480</div></td> <td 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